Iran: Uranium Enrichment

Lord Janner of Braunstone: asked Her Majesty's Government:
	Whether the third United Nations Security Council resolution on Iran has been effective in ensuring compliance in respect of its uranium enrichment programme.

Lord Malloch-Brown: My Lords, I apologise for the difficulty in finding my Answer. I will have to make it up. Confronted with a missing Answer I have no choice but to say that we are confident that when there is an opportunity to review sanctions, the UN Security Council will, if necessary, strengthen them with regard to Iran's nuclear programme.

Lord Janner of Braunstone: My Lords, I thank my noble friend for his Answer. Let us hope that he is right. I hope that he does not look at his papers and find the opposite in a few moments' time, but then it will be too late. Meanwhile, I am sure that my noble friend will agree that there is deep concern that Iran continues openly to defy the will of the international community. Indeed, earlier this month it announced the installation of 6,000 new centrifuges at its nuclear plant in Natanz, which doubled its previous capacity and ensured that it comes ever closer to possessing nuclear weapons. Given that, does my noble friend—whether he has his notes or not—share my great alarm, especially at the Iranian president's continuing anti-Semitic attacks on Israel, calling it "filthy bacteria" and questioning its right to exist? What specific measures will Her Majesty's Government now propose to the Security Council to increase the weight of sanctions imposed on Iran? Is my noble friend confident that there is sufficient consensus within the Security Council further to strengthen the sanctions so that they will become effective?

Lord Malloch-Brown: My Lords, I assure my noble friend that both I and my notes share his concern about Iran. The IAEA's most recent report raised a number of issues of great concern about its compliance with the Security Council resolutions. We are appalled by the statements made by the President about Israel and its right to exist. As for the future, we have already seen the overwhelming support of the international community for the E3+3 dual-track policy reflected in four UN Security Council votes.
	As for what happens next, much depends on how Iran chooses to comply or not with its international obligations, but we believe that if further measures are required, the international community will continue to support them.

Lord Wallace of Saltaire: My Lords, we all recognise the unpleasant nature of the current Iranian regime and the worrying question of nuclear weapons, but does the Minister accept that we will nevertheless not get constructive dialogue with that regime unless we broaden it out to a wider framework? In 2003, the Iranian Government asked for a wider discussion about security in the region. The United States vetoed that. Iran has been mildly helpful in Iraq and considerably helpful in Afghanistan. Is there not a case for a wider framework for discussions within which we can then make progress on the nuclear issue?

Lord Malloch-Brown: My Lords, obviously the noble Lord is aware of many who have thought to open various back channel communications with the Iranians. However, it is very difficult to reward non-compliance by formally broadening the dialogue at this point. If Iran complies with the Security Council resolutions, a broader dialogue will follow as part of the careful set of incentives that have been constructed to reward compliance.

Lord Howell of Guildford: My Lords, all that sounds a bit mystifying. Is not the right answer to the thoroughly justifiable unease and alarm expressed by the noble Lord, Lord Janner, that there is no consensus in the Security Council? Russia and China are not playing along with the aim to squeeze Iran; in fact Russia is trying to supply further nuclear equipment to Iran. Is not the basic economic reality that with $120 oil Iran is doing quite nicely thank you and the sanctions are having minimal and probably zero effect? Is not the need now, as the noble Lord, Lord Wallace, indicated, to bring the Russians and even the Chinese into the discussion, although it may be distasteful to our American allies, rather than trying to penalise them as well? Without those two, the chances of any serious global pressure on Iran are zero, and it is bound to head for both a civil nuclear and a weaponised nuclear programme.

Lord Malloch-Brown: My Lords, the noble Lord is aware that the E3+3 formation, which has led on behalf of the Security Council and devised these resolutions—the last of which I think was passed by 14 to zero—is China, France, Germany, Russia and the United States, in addition to us. China and Russia are part of this negotiation, and we hope that they are very much committed to this process.

Lord Corbett of Castle Vale: My Lords, has the Minister seen the reports that, far from slowing down the nuclear enrichment programme, the mullahs have spread their nuclear weapons development programme across 12 sites in the country to make it harder for the IAEA to properly monitor them? They are stepping up the enrichment. Those reports come from the resistance body that told the world five or six years ago about the Iranians' illegal nuclear activities.

Lord Malloch-Brown: My Lords, I am not aware of that specific report, but we are very concerned by proliferation-sensitive activity, such as uranium enrichment with no apparent civilian use. Iran hid aspects of its programme for nearly two decades. My noble friend is right that the IAEA inspectors still cannot get the access that they seek. Nevertheless, the very nature of this problem—a diversified, decentralised programme across Iran—does not lend itself to a military as against a diplomatic solution. We are convinced that the right set of incentives and punishments available diplomatically and through sanctions to force and encourage Iranian compliance remains the safest way forward, although it is certainly not assured of necessary success.

Public Companies: Directors' Bonuses

Lord Dubs: asked Her Majesty's Government:
	Whether they will take steps to ensure that bonuses are paid to directors of publicly owned companies only on the basis of merit.

Lord Jones of Birmingham: My Lords, I assume that my noble friend is referring to companies in the ownership of the Government as opposed to those publicly quoted on the Stock Exchange. The remuneration of the directors of such defined publicly owned companies is a matter for the remuneration committee of those companies, whose recommendations are submitted for approval to the Government as a shareholder. It is important to ensure that bonuses are paid on merit and that they support delivery of agreed objectives.

Lord Dubs: My Lords, I am grateful to my noble friend for his Answer, although it seems slightly at variance with the facts as I understand them. How is it possible that, in the case of Northern Rock, the chief executive gets a massive pay-off in return for the total failure of the company and, in the case of Network Rail, the directors get large bonuses at the same time as Network Rail is being fined £34,000 for incompetence? These are difficult issues to understand. Most people in Britain are asking whether those people who have accepted the money have no shame.

Lord Jones of Birmingham: My Lords, I am very pleased that my noble friend raised Northern Rock. The settlement of the chief executive's remuneration on termination was settled while it was a private company. It was not settled while it was in government ownership, and government ownership took over after the contractual obligation was concluded.

Lord Lee of Trafford: My Lords, following the pronouncement yesterday by the Governor of the Bank of England, will the Minister, in his typically robust way, urge the shareholders of banks, who are being asked to subscribe for new capital to rebuild the balance sheets, to examine the methodology of remuneration of the directors of those banks before they send off their cheques?

Lord Jones of Birmingham: My Lords, I shall deal first with the second part of my noble friend's supplementary question because I would not want it to be thought that I had avoided it. When bonuses have been awarded to Network Rail directors, any non-compliance or fines that have occurred in the past have been taken into account and I sincerely hope that that would happen again.
	On the methodology of remuneration of banks, come the big rights issues that are currently in question, I think it is reasonable for shareholders to say, "Obviously, at this moment, we do not want to know exactly how much you are going to get, but we would like to know the methodology on which you are going to be paid". At the end of the day, it is very difficult to say to a small businessman in Birmingham, "By the way, the bank which asks you for a lot of information when it is about to lend you some money to do something and then judges your judgments accordingly, will be seen to be remunerating its directors substantially, despite big errors of judgment having been made". I want to live in a society which says, "The sky's the limit; you can come to Britain and earn as much as you possibly can, but just be aware that you function in democratic capitalism because of the will of the people and if you do not deal with the perception you create you will pay a price". I should like to think that the banks would have that at the top of their agenda.

Lord Borrie: My Lords, is my noble friend aware that in Germany the salaries of chief executives and other directors have shot up in the past 10 years in relation to average earnings within their companies? There are two political parties—one in coalition in government and one in opposition—which are seriously considering legal provisions to put a cap on such discrepancies. Will my noble friend consider such a course of action in this country?

Lord Jones of Birmingham: My Lords, I am glad my noble friend is referring to Germany. I would love Germany to do that. Then I could go round the world in my job for UK trade investment and say, "Don't invest in Germany; come to a country that does not do that".

Lord Harris of Haringey: My Lords, given that we have talked about the carrots for directors of publicly owned companies, perhaps I can ask about the sticks. Does my noble friend agree that people who are directors of publicly owned companies, privately owned companies or, for that matter, public agencies should have some degree of personal responsibility if they preside over appalling breaches of information security?

Lord Jones of Birmingham: My Lords, first, one has to understand that we in this House are all very well qualified and have PhDs in hindsight. It is extremely important that we judge boards of directors, their remuneration committees and, in the case of government-owned companies, the ultimate shareholder on the facts at the time and that we do not stand in judgment on facts that did not exist at that time. Secondly, it is extremely important with publicly owned companies that the remuneration committee, which is independently appointed—that is what independence means—reports to the Government and that the Government have the final say. If you want the best managers, you have to pay the going rate. Sometimes that is unpalatable to me and I am sure it is to my noble friends but, at the end of the day, if you want the best you have to pay for it. Thirdly, we should remember that if such people are paid the going rate, they must suffer the consequences of incompetence and errors of judgment. In that respect it is important that they are not seen to walk away with huge rewards for failure. That would not be right.

Lord Dubs: My Lords, my noble friend referred to directors suffering the consequences of their incompetence. At the very same time as Network Rail was fined £34 million by the regulator, there was an announcement of large sums of money being paid to the directors. If the Government are shareholders, why can they not stop that happening or, at least, ensure that the bonuses are used to pay the fines.

Lord Jones of Birmingham: My Lords, my noble friend raised the point of methodology of remuneration. Timing is so important. You can see an announcement of something like a fine, which has probably come after two or three years of investigation, and very soon after you see the remuneration paid, but that might be in relation to a completely different period. That is a fact; it might be unpalatable, but it is true. You have to get to the essential element of when the contract was entered into and ensure that the methodology will accommodate my noble friend's absolutely valid point. You should not judge one set of criteria against another set of news and call it a failure.

Baroness Deech: My Lords, does the Minister agree that there is perhaps not much logic in paying a bonus where the company is doing very well, there is merit, but no profit is necessarily being made? I instance the BBC. In order to stop the growth of the bonus culture there should be some investigation of any possible tax advantages and, in particular, pension advantages that may lie behind the award of bonuses in such situations.

Lord Jones of Birmingham: My Lords, we are the fifth biggest economy and one of the most globally competitive nations on the planet, so it is not in the interests of this country to say that we are trying to kill the bonus culture. Believe me, these people will go to other countries. What is important is that people know that we stand for social justice and economic success at the same time. That means you get the methodology of remuneration right at the start of the contract negotiations, not on termination.

Sri Lanka

Lord Sheikh: asked Her Majesty's Government:
	What steps they are taking to achieve peace in Sri Lanka.

Lord Malloch-Brown: My Lords, my right honourable friend the Foreign Secretary and I have made it clear to the Sri Lankan Government that the UK stands ready to support a process of reconciliation. We continue to urge the parties to the conflict to place peace above self-interest and to engage with Sri Lankans from all communities. A sustainable solution to the conflict should promote democracy and stability and uphold international human rights principles. Only a just and inclusive political process can achieve this.

Lord Sheikh: My Lords, I thank the Minister for that reply. The fighting and turmoil in Sri Lanka is causing not only problems in the country but a great deal of distress among Sri Lankans who have settled here.
	In November 2006, the Secretary of State for Northern Ireland visited Sri Lanka. We have achieved peace in Northern Ireland, and I believe, because of our historic ties, that what we have learned in Northern Ireland can be of assistance in relation to the problems in Sri Lanka. On 1April, the Sri Lankan Foreign Minister came here and had discussions with Ministers. Subsequently there was fighting on 23April. Is there any merit in sending a ministerial delegation to Sri Lanka? And can we continue with our financial support in order that that can be used as an incentive to achieve peace?

Lord Malloch-Brown: My Lords, the noble Lord makes a very good point about the comparison with Northern Ireland. The former Prime Minister, Tony Blair, pressed this point on the Sri Lankans and sent people with expertise on the Northern Ireland solution to advise them. On 1 April, when the Foreign Minister was doing his briefing, I again reminded him of the Northern Ireland parallel and offered to make expertise available to him.
	As to the point about a ministerial visit, I will be visiting Sri Lanka in the coming months.

Lord Hylton: My Lords, what information do the Government have about the recent deaths of one Sri Lankan parliamentarian and one Roman Catholic priest alleged to have been killed by mines placed by Government forces? Also, will the Government and other members of the Commonwealth ask for humanitarian and human rights observers to be allowed access to that country?

Lord Malloch-Brown: My Lords, I will need to return to the noble Lord on the specific incident that he raises. There have been a number of tragic deaths of civilians and politicians in recent months in Sri Lanka. There has been a pick-up in violence, which is extremely alarming, and targeting of political leaders. We have been pressing—most recently in my speech to the Human Rights Council—for the High Commissioner for Human Rights to be allowed to open an office in Sri Lanka because we think it is enormously important to keep human rights observers and a broader international presence in that troubled country.

Lord Dholakia: My Lords, does the Minister accept that neither terrorism nor the military action by either party will resolve the present crisis in Sri Lanka, and that the only valid process is a political one? Is he aware of the deep divisions within Sri Lankan communities in this country—within the Tamil and Sinhalese communities? The problem of conflict between the communities has been highlighted. Will the Minister have a word with the Minister responsible for community cohesion to ensure that action is taken so that community relations between different factions are not harmed?

Lord Malloch-Brown: My Lords, I echo the noble Lord's first point: there is only a political solution, and we urge both sides to revert from this militarised approach and return to genuine political negotiation to solve this issue. I and other noble Lords in this House are all too aware of the divisions among the Sri Lankan communities in this country. I fear that the issue may go beyond the capacity of the Minister for social cohesion, as it is so deeply rooted in the conflict in Sri Lanka. I suspect that the solution here, too, lies in a solution back home in Sri Lanka.

Lord Naseby: My Lords, is not my noble friend who asked the Question right to say that there is an analogy with Northern Ireland? Cutting funds from Noraid to the IRA ensured that both parties came together. There is welcome news: that three Sri Lankans have recently been investigated in depth for providing funds to the Tamil Tigers. Should we and the authorities in this country not be more active in ensuring that bogus charities and fundraising events are stopped? That money goes straight to the Tamil Tigers.

Lord Malloch-Brown: My Lords, the noble Lord knows that the LTTE is a proscribed organisation in this country. Wherever there are suspicions that moneys are being transferred to it, we have sought to investigate. However, these are hard allegations to prove. I nevertheless agree with the noble Lord's basic underlying point: we should all appeal to Sri Lankans in our communities to understand that supporting terrorism with their contributions is not a contribution to peace in their country.

Lord Howell of Guildford: My Lords, does the Minster know anything about the international eminent persons group in Sri Lanka, of which the British member is Professor Sir Nigel Rodley? I understand that the group broke up in disarray and disagreement yesterday and left Sri Lanka. Can the Minister give us any update on that?

Lord Malloch-Brown: My Lords, yes. The group was assembled by the President of Sri Lanka based on nominations from countries such as ourselves; we nominated Sir Nigel. It was intended to provide an international legal opinion on the internal presidential commission of inquiry into human rights abuses. The members were so disappointed because they felt that advice was not being followed that they have essentially thrown in the towel. That is a real commentary on the seriousness of the human rights situation in Sri Lanka.

Democratic Republic of Congo: UN Troops

Lord Avebury: asked Her Majesty's Government:
	What action they will take regarding allegations that United Nations peacekeeping troops in the Democratic Republic of Congo traded weapons and ammunition to local militias.

Lord Malloch-Brown: My Lords, we fully support and have contributed to UN efforts on zero tolerance against misconduct. It is for the UN to investigate individual allegations of misconduct and to ensure that the troop-contributing country concerned deals with any substantiated allegations. The UN's Office of Internal Oversight Services investigated the allegations on weapons and ammunition trading but did not find sufficient evidence to substantiate them. I might add that MONUC's peacekeepers play a vital role in resolving the conflict in the DRC.

Lord Avebury: My Lords, they did find, did they not, that the peacekeepers had facilitated the trading in gold and other commodities with the armed groups? Does the Minister agree that the General Assembly's recent criticisms of the OIOS's investigations methodology indicate the need for urgent reform of the OIOS; and because it has an interest in exonerating the peacekeepers from criticism, can the Minister ensure that any such reforms include an external oversight of the OIOS by the equivalent of non-executive directors who are appointed from outside the UN system?

Lord Malloch-Brown: My Lords, the allegations to which the noble Lord refers, which were extensively covered in a "Panorama" programme that many noble Lords may have seen, were investigated last year by the United Nations and there was no evidence to substantiate the serious allegations of weapons trading. The allegations were also, it might be added, localised and specific to one unit rather than widespread throughout the mission. Two witnesses from the militia changed their evidence in the "Panorama" programme from what they had said in the investigation, so it is difficult to know the veracity of their subsequent claims. However, the head of UN peacekeeping has made it clear that if the "Panorama" programme or anyone else has fresh evidence, that, too, will be investigated.
	On the noble Lord's second point, the OIOS is largely independent of the UN and reports directly to the General Assembly. There is also a new oversight body for audit matters of the General Assembly itself. The head of the OIOS is a former auditor-general of both Sweden and Kosovo, so she is quite a crusader for justice in the fight against corruption. I therefore suspect that this has been well investigated.

Lord Alton of Liverpool: My Lords, does the Minister agree that the phenomenal loss of life in the Democratic Republic of Congo, estimated at more than 3 million over the past decade or so, this haemorrhaging of life, has been brought about because of the free flow of arms into the Congo? However, 95 per cent of all weapons going into Africa are manufactured outside of Africa. That underlines the need for the United Nations to act constructively by not only creating a global arms treaty such as they are considering, but stopping the flow into the Congo, especially into the hands of young people and children who have been armed beyond belief.

Lord Malloch-Brown: My Lords, as the noble Lord knows, the UK is one of the leaders in trying to get a global arms treaty to cover small arms, which are a devastating weapon in the hands of young people and generally among insurgents and other poorly trained groups. The good news about the Congo is that, for now at least, the violence is behind us. The peace agreement and elections, all of it policed and supported by MONUC, has led to a much more stable situation. Despite these very troubling allegations and concerns, MONUC's record overall shows that it has been a decisive force for peace in that difficult country.

Lord Howell of Guildford: My Lords, I am very glad that the Minister made that last point. Without in any way condoning the reported malpractices, which of course, we must take very seriously, is not the bottom line that the 17,000 UN troops, or many of them, are really making some progress in bringing stability to this area which is so full of bloodshed and atrocities? Should we not recognise the good side of what is going on there and support UN peacekeeping, in its best sense, wherever it is conducted by countries that have a sense of world responsibility?

Lord Malloch-Brown: My Lords, I very much thank the noble Lord for those remarks. The great majority of the world's 110,000 UN peacekeepers are extraordinary people taking on difficult work under very difficult circumstances. Where there are allegations of corruption or of sexual exploitation, which has been another major issue, they are to do with a very small minority. I am confident that the United Nations and the troop-contributing countries are working hard to improve disciplinary and investigation arrangements to make sure that even these handful of cases, which tarnish the reputation of peacekeeping as a whole, are brought to a resolution and that those who are offenders are removed from any peacekeeping role.

Lord Chidgey: My Lords, as the Minister will be aware, in his report to the General Assembly on strengthening investigations the Secretary-General noted that some 250 misconduct cases were being investigated by the OIOS at that time. Surely that strengthens the argument for a review into the investigation procedures, which is at the heart of the issue. However, is the Minister as concerned as I am that the General Assembly's response was to call for more information on the terms reference of such a review in order to see whether it should have a review at all? Does he share our concerns about that?

Lord Malloch-Brown: My Lords, I should perhaps at this point acknowledge a special interest in this because I set up the unit being discussed. I was well aware that it would cause deep offence to the General Assembly as it was set up in the aftermath of Oil for Food when the United Nations needed to cleanse the stables and ensure that any allegations of wrongdoing were chased down and dealt with firmly and clearly. Some in the General Assembly saw it as an unsettling act intended somehow to tilt power towards western donors and away from the membership as a whole. I applaud the Secretary-General's efforts to consolidate this office. Investigations such as this one show that this reform will survive time and any attacks from the General Assembly.

Lord Brooke of Sutton Mandeville: My Lords, is the Minister aware that it takes longer to set up a company in the Democratic Republic of Congo than anywhere else on earth? Is there any way in which outsiders can help to cure that malfunctioning?

Lord Malloch-Brown: My Lords, the noble Lord always surprises me with a statistic of which I was unaware, and he has done so again today. But perhaps I should not have been surprised; I suppose it should have been predictable that the Congo is close to the bottom of the World Bank list rating how long it takes to establish a business. It is mainly insiders who, responding to that pressure, will have to strip out the layers of regulation and bureaucracy that make registering a company so difficult. The best pressure comes from seeing that countries such as Mozambique that have done so have been rewarded by high rates of economic growth and high rates of inward foreign investment.

Housing and Regeneration Bill

Baroness Andrews: My Lords, I beg to move the Motion standing in my name on the Order Paper.
	Moved, That it be an instruction to the Grand Committee to which the Housing and Regeneration Bill has been committed that they consider the Bill in the following order:
	Clause 1 Schedule 1 Clauses 2 to 9Schedule 2Clauses 10 and 11Schedule 3Clause 12Schedule 4Clauses 13 to 52Schedule 5Clause 53Schedules 6 and 7Clauses 54 to 58Schedule 8Clauses 59 to 284Schedule 9Clauses 285 to 298Schedule 10Clauses 299 to 302Schedule 11 Clauses 303 and 304Schedule 12Clauses 305 to 310Schedule 13Clauses 311 to 319Schedule 14Clauses 320 to 324.—(Baroness Andrews.)

On Question, Motion agreed to.

Criminal Justice and Immigration Bill

Read a third time.

Lord Bach: moved Amendment No. 1:
	After Clause 11, insert the following new Clause—
	"Pre-sentence reports
	In section 158 of the Criminal Justice Act 2003 (c. 44) (meaning of "pre-sentence report"), after subsection (1) insert—
	"(1A) Subject to any rules made under subsection (1)(b) and to subsection (1B), the court may accept a pre-sentence report given orally in open court.
	(1B) But a pre-sentence report that—
	(a) relates to an offender aged under 18, and(b) is required to be obtained and considered before the court forms an opinion mentioned in section 156(3)(a),must be in writing.""

Lord Bach: My Lords, we have tabled Amendment No. 1 in response to concerns raised in debate in Committee on pre-sentence reports for young offenders aged under 18. The Criminal Justice Act 2003 makes provision for oral reports to be made to a court. That enables cases for relatively minor offences to proceed where the offender is already known to the court representative and where, in most cases, a pre-sentence report will have been prepared on a previous recent occasion. It is right that a young person should be dealt with promptly when charged with a criminal offence if the case is proven. It is known that speedy intervention has the greatest effect on preventing reoffending. That is why we have focused on reducing the time for persistent young offenders to be brought before a court.
	The majority of pre-sentence reports, 80 per cent, will be full written reports, 11 per cent will be oral reports given to the court and the remaining 9 per cent are described as specific sentence reports—shortened, written pre-sentence reports. Where the offence is fairly low level and the court has a recent full report before it, or where the offence is very minor, we believe it is in the young person's best interests that the case is proceeded with promptly. By way of example, where the young person has committed an offence of shoplifting of a low value item or minor criminal damage with no aggravating circumstances—for instance, there is no associated drug abuse problem—and the court is content that a full report is not required, we believe that an oral report may be appropriate. Similarly, an oral report on the current offence may be provided where the young person is a repeat offender and a written pre-sentence report was prepared for the previous offence and remains valid. In those cases, we think it would be unreasonable to adjourn the case and remand or bail the young person until a new report is completed. However, I acknowledge the concerns that were raised earlier about the need to ensure that where custody is being considered the court has the full background information before it in a written pre-sentence report.
	In Committee, the noble and learned Baroness, Lady Butler-Sloss, expressed concern, as did other noble Lords, about the possibility of a young person being sentenced to custody without the court having a written report before it. The noble Lord, Lord Kingsland, has expressed similar concerns. I can confirm that this possibility is not excluded, either in existing legislation, or the national standards for youth justice services. I acknowledge the concerns of noble Lords. Amendment No. 1 will ensure that the court has a written pre-sentence report when considering sentencing a young offender to custody.
	I will also deal with Amendment No. 2, which will be moved in due course by the noble Lord, Lord Kingsland. We are very grateful to the noble Lord for giving us the opportunity to discuss his amendment and our amendment with him this morning and earlier this afternoon. I think we understand his concern correctly: it is that Amendment No. 1 would mean that the court would have to decide that custody was appropriate before requesting a written pre-sentence report. He rightly pointed out that, in many cases, the court would not be able to come to such a view until it had seen the pre-sentence report.
	We have considered the matter further since the noble Lord's observations of earlier today. We can reassure the noble Lord that this is not the effect of Amendment No. 1. Section 156(3) of the Criminal Justice Act 2003 requires that a court must, in respect of a person under the age of 18, obtain a pre-sentence report before reaching an opinion. Under Section 152(2) of that Act, the offence, or combination of the offence and one or more offences associated with it, must be so serious that neither a fine alone, nor a community sentence, can be justified. In other words, the court must obtain a pre-sentence report before reaching a decision that the custody threshold has been met. In practice, this means that where the defendant pleads not guilty, but is convicted after a trial, the court will have to adjourn, and a pre-sentence report be prepared, in a case where custody is a possibility. I repeat those words: where custody is a possibility.
	The effect of Amendment No. 1 is that a written pre-sentence report will have to be prepared in those circumstances. The court will then be in a position to come to a view as to whether the offender has reached the custody threshold. The amendment will mean that the court cannot come to such a view without a written pre-sentence report. It also means that, as at present, written pre-sentence reports will be prepared in many instances where the court decides, in light of that report, that custody is not appropriate. I hope that answers noble Lords' concerns, particularly those of the noble Lord, Lord Kingsland. There is no difference between us or around the House. A young person should not be sent to custody without a full written pre-sentence report being obtained. In due course I am likely to invite the noble Lord to withdraw his amendment; for the moment, I beg to move Amendment No.1.

Lord Kingsland: moved, as an amendment to Amendment No. 1, Amendment No. 2:
	After Clause 11, line 11, leave out "156(3)(a)" and insert "156(3)"

Lord Kingsland: My Lords, I am most grateful to the Minister for his opening remarks. He will recall that, in Committee, widespread concern was expressed by many noble Lords about the absence of an obligation on a court to require a written report before a custodial sentence was passed. I would like to think that it was that strength of opinion that has led the Government to come forward with the amendment now before your Lordships. I am extremely grateful to the Government for responding in this manner.
	I do not think that the Government have gone quite far enough, which explains my amendment to their amendment. I would require written reports in all circumstances, whether the likely sentence was going to be custodial or some form of community sentence. It seems to me that particular care should be taken in respect of offenders aged under 18. I do not see why as much care should be taken in relation to those who are going to receive a community order of one sort or another as a custodial sentence; but I readily admit that our prime concern is with custodial sentences.
	I was extremely grateful to the noble Lords, Lord Hunt of Kings Heath and Lord Bach, for listening to my more technical preoccupations with their amendment. What exactly is meant by the expression,
	"a pre-sentence report which is required to be obtained and considered before the court forms an opinion",
	mentioned in Section 156(3)(a)? It is quite clear that under that section a court must obtain and consider a pre-sentence report before forming an opinion as to whether, under Section 152(2), the custodial threshold had been reached. The difficulty is that a judge will not reach a conclusion on whether the custodial threshold has been reached until he has read the pre-sentence report. This means that the judge will have to take a view immediately after a defendant is convicted about whether there is the slightest chance that, following receipt of a report, he will pass a custodial sentence.
	My understanding of what the noble Lord, Lord Bach, has said to the House is that it must be clear that if there is the slightest possibility that a custodial sentence might ensue—only the judge will know that—he must require the report to come to him in writing. In a sense, this amendment is saying that whether or not it is in writing is entirely up to the judge: at the end of the day, it is his subjective judgment to determine whether the report is required to be in writing or whether it can be an oral report.
	As long as that is clearly understood by the judiciary, for my part and the Opposition's part, I am content with the amendment. I can see the noble Lord, Lord Bach, nodding, which gives me some hope that I shall get my way on this. Let me put it another way, if there is the slightest chance that a custodial sentence is to be passed, and if there is no report in writing, there must be a serious chance that the process will be in some way or other quashed by a higher court. It is very important that Parliament is clear about what it is doing before it does it.

Lord Elystan-Morgan: My Lords, it gives me very great pleasure to say how impressed I am by the care, assiduity and sensitivity with which the Government and the Opposition have approached this question. One of the most important conclusions that a court can ever arrive at is to deprive a young person of his or her liberty. However, I am not sure that I entirely agree with the argument put forward so clearly and fairly by the noble Lord, Lord Kingsland.
	There are two stages to the judge's consideration. First, and this follows rather slavishly the wording, if I remember rightly, of Section 152 of the 2003 Act, it must be considered whether the threshold for custody has been crossed—in other words, whether the seriousness of that offence, with one other offence, at least, taken into consideration, is such that anything other than the custodial disposal would not be justified. That is not the exact wording but would be near to it.
	Therefore, there is a preliminary decision as to whether that threshold has been crossed. The learned judge then says, "If that has been crossed, I will have to consider all the other considerations, including, of course, the offender's antecedence and, no doubt, all the information that can be given in either a written or an oral report". What is concerned here is not so much a final decision by the learned judge, but a preliminary one as to the crossing of that threshold line.
	My other point is that although a written report is always to be preferred to an oral one, I would like to pay the highest possible tribute to those hardworking probation officers in daily attendance at the courts who, sometimes at very short notice, will produce a most incisive and comprehensive report on an offender's situation. They can be helped, of course, by the learned judge having had the papers the night before and digested them and, having warned learned counsel before 10.30 am, informing that person that he would like that report done. Sometimes—and I am afraid that I was guilty of this from time to time—it might be at 12.45 pm that one would ask for that report by 2 pm.
	However, my own experience was that these reports were prepared with very great conscientiousness, dedication and thoroughness. Almost invariably, a person asked to conduct such an inquiry would first get in touch with the probation officer who had written the last report and, if that was not possible, to have the matter adjourned for a few hours until that report was available. Therefore, one should not demote the verbal report too much, because in most cases, it will be of a very high standard. It will enable the judge, once there has been a preliminary decision under Section 152, as a crossing of the threshold, to be able to review that situation in the light of all the information that the court will then have.

The Earl of Onslow: My Lords, having spoken on this issue in Committee, I am moved, first, to thank the Government for listening to what other people have said, and that is always to be congratulated. It seems to me that what the noble Lord, Lord Bach, has just said may be 100 per cent right, whereas my noble friend Lord Kingsland is guaranteeing that it is going to be right. Under those circumstances, to avoid doubt, what harm is there—and it seems there is some benefit—in amending the Bill in the way that my noble friend says? I am not being difficult, just trying to be clear.

Baroness Butler-Sloss: My Lords, it will not surprise Ministers to learn that I am delighted that the Government have moved this amendment and very much support it. I share the view of the noble Lord, Lord Elystan-Morgan. If there is any real likelihood of a young person, usually a man, under the age of 18, going to prison, it would be most unlikely that the judge would not want, in any event, a written report and consideration of a great deal of what would come into such a report.
	This is a moment at which one can really leave it to the judge to decide what more he needs. I would like to pay tribute to the excellent oral reports that are given, but, where you are likely to go to prison, you are entitled to have a written report. I would have expected that to be provided in a case where a young person is likely to go to prison.

Lord Thomas of Gresford: My Lords, we on these Benches first raised this issue in Committee under Amendment No. 79. We are very grateful to the Government for listening and for bringing forward this amendment. Unfortunately, I disagree with the noble Lord, Lord Elystan-Morgan, about the value of an oral report. Probation officers have in the past done their very best but I have always thought it unsatisfactory that they should be required at very short notice to take upon themselves the production of a report. Normally, these reports require inquiries and consultation with the family. It is far better that that be a considered process—very much more so when the defendant is under 18.
	The Government have listened to the views put forward from all around the House and I am grateful to them for what they are doing. I also support the noble Lord, Lord Kingsland, for the belt-and-braces approach he has taken in his amendment to the amendment. If he wishes to take the matter further, we will support him.

Lord Bach: My Lords, I thank noble Lords for their contributions to this debate. On behalf of the Government, I thank Liberal Democrat Members for having raised this issue in Committee and other Members who have raised it during our proceedings on the Floor of the House. I argue that with Amendment No. 1, we have come up with the right answer. The only thing about which I disagree with the noble Lord, Lord Kingsland, is whether there should necessarily be a written report in each case where a community sentence is imposed. We certainly agree with the view that was expressed around the House that there should be a written report in cases where a custodial sentence is or could be imposed.
	The noble Lord is pressing me, quite rightly, to be as clear as possible. As I said when moving the amendment, in practice this means that where the defendant pleads not guilty but is tried and then found guilty, after conviction the court will have to adjourn and a pre-sentence report will be prepared in a case where custody is a possibility. I do not think that we can be much clearer than that. After that, it will be in the hands of the judge, who is the sentencer.

Lord Kingsland: My Lords, as I think I said earlier, I am most grateful to the Government for bringing forward the amendment. The noble Lord, Lord Bach, has clarified a somewhat occluded part of its wording in a way that I find entirely satisfactory.
	I am disappointed that the Government are not minded to accept my amendment. I think that in some respects, where a community order is under consideration, the variety of possible components of that order benefit greatly from a carefully thought out pre-sentence report on the history of the young person, his or her character and his or her suitability for the wide variety of possible rehabilitation orders that are open to the court. It is a different argument for a written report but, I believe, an equally powerful one. Nevertheless, the Government have come forward with their amendment; it meets us at least halfway. In those circumstances, I shall not press my amendment this afternoon. Therefore, I beg leave to withdraw the amendment.

Amendment No. 2, as an amendment to Amendment No. 1, by leave, withdrawn.
	On Question, Amendment No. 1 agreed to.
	Clause 16 [The assessment of dangerousness]:

Lord Lloyd of Berwick: moved Amendment No. 3:
	Clause 16, page 11, line 18, leave out from "is" to end of line 37 and insert "repealed"

Lord Lloyd of Berwick: My Lords, the object of the amendment is to repeal Section 229 of the Criminal Justice Act 2003. I should first explain why I did not press this amendment to a vote on Report. Section 229 of the 2003 Act contains the statutory definition of dangerousness. By subsection (3), which is the crucial subsection, the court is obliged to assume dangerousness if the offender has been convicted on two or more occasions of certain specified offences commonly known as the "two strikes and you're out" provision.
	That subsection is to be repealed by the Bill as it stands and I am very grateful to the Government that they are taking that course. All that will then be left of Section 229 is subsection (2). All that subsection (2) will say is that the court in assessing dangerousness,
	"must take into account of all such information as is available to it about the nature and circumstances of the offence",
	and may take into account previous convictions. That is all Section 229 will then provide.
	On Report, I pointed out that the courts have always taken previous convictions into account. What else can they take into account more obviously than previous convictions? They really do not need to be told by Parliament that they may do that. I think that is now accepted by the Government, at least to that extent, that Section 229 is covered by the existing practice.
	However, the noble Lord, Lord Bach, argued that the reference in Section 229 to information about the offence, or information about the offender, adds something that the courts have not always taken into account and he referred to the case of Considine in support of that argument. I was unfamiliar with that case so I needed to look at it before asking the House to express a view. I have now looked at it. It turns out that, so far from helping the argument of the noble Lord, Lord Bach, it helps mine. Indeed, I would go further than that and say that it is absolutely conclusive in favour of my argument. In an earlier decision, in the case of Johnson, the court said that subsection (2),
	"adds nothing to the approach which the sentencer would normally take, that is, to consider all the information available to the court ... it is difficult to see how any sentencer, properly forming his judgment, would properly fail to take all matters of possible relevance into account".
	I say amen to that. That sentence in Johnson was expressly approved by a five-judge Court of Appeal in the case of Considine, the case on which the noble Lord, Lord Bach, relied.
	In the light of my looking at that case, I wrote to the noble Lord and to the Lord Chancellor to ask them to reconsider Clause 16. Once subsection (3) has gone—and it is going—to retain Section 229 is pointless. It is saying only what already happens. Hence my amendment to repeal Section 229 of the 2003 Act. In his letter of reply the Lord Chancellor makes three points. He accepts now that subsection (2) does reflect the existing practice of the judges in assessing dangerousness. But he says that the statute got there first. It is only in 2007 in Considine that the case law caught up with Section 229.
	It may be that that sounds odd, but it seems to me that that is what the Lord Chancellor is saying in this sentence of his letter:
	"The fact that the courts did in fact, by a process of case law development, confirm by the end of 2007 that the statute reflects case law derived in other contexts as to assessing dangerousness is helpful".
	As I understand it, the argument is that the courts might have taken a different view in assessing dangerousness in relation to the new, indeterminate sentence than they have always done in relation to the ordinary life sentence. If that is the meaning of that argument, I suggest in all seriousness that it is scraping the very bottom of the barrel. It suggests that, in interpreting this new provision covering indeterminate sentences, the court might have excluded all together what is relevant in assessing dangerousness. In any event, what might have been the position no longer matters, because we now know as a result of Considine that there is no difference between Section 229 and the practice which the judges have already adopted. So I say to the House that Section 229, consisting of what it will consist of unless my amendment is adopted, is wholly otiose and should be repealed.
	I can deal with the second and third arguments of the Lord Chancellor quite simply. The second argument was that it might imply an intention to repeal or alter the law substantially if we repealed Section 229. But we are of course altering the law substantially in the Bill by repealing subsection (3). That is the subsection which has the teeth, as I have tried to explain. We are not surely implying anything by repealing Section 229 about the information which courts ordinarily take into account in assessing dangerousness, because, as I have said, we now know that subsection (2) adds nothing to the existing practice.
	Finally, the letter states that Parliament can, if it wishes, embody case law in legislation, to which I say, "Of course, it can". But there is surely no point in stating the obvious. It is surely our duty to shorten, so far as we can, and simplify legislation. We have an opportunity of doing that now by repealing Section 229, which if it remains, will simply be a blemish on the statute book. I invite the House to do that and beg to move.

Lord Thomas of Gresford: My Lords, this is the second clause in the Bill which is useless and will draw the contempt of the legal profession and the judiciary if it is allowed to remain. This Government have had the tendency to look overseas to the United States of America and adopt its practices. That is a country where 750 out of 100,000 people are in prison, as opposed to 150 out of 100,000 in this country and an average of about 70 or 80 in the rest of Europe. For that reason, they introduced as a good wheeze the idea of "two strikes and you're out". The Government have recognised that that has done nothing to assist the administration of justice in this country. All it has done is serve to fill our prisons and produce the ridiculous anomalies of people being given indeterminate sentences, but with the proviso that they can apply for parole after 28 days. The end of that is very welcome to us. But we are now left with nothing, other than simply a repetition of what already has been the practice, as the Lord Chancellor has recognised in his letter. I urge your Lordships not to make nonsense of the criminal law in this way. The Government should go the whole hog. If they want to get rid of "two strikes and you're out", they should get rid of it and not leave useless bits of legislation hanging about.

Lord Bach: My Lords, I, like the House, am grateful to the noble and learned Lord, Lord Lloyd of Berwick, for putting forward again his submission that there is no need to retain Section 229—the assessment of dangerousness section—of the Criminal Justice Act 2003 in what is, of course, its truncated form following our reforms, about which he has just been generous.
	We are grateful to the noble and learned Lord for bringing the issue to the attention of the House. As he has said, he has been in correspondence with my right honourable friend the Lord Chancellor, and I believe that they have also spoken. At the noble and learned Lord's instigation, we have undertaken further consultation with senior Court of Appeal judges, who deal with criminal cases day after day. They have indicated informally to the Secretary of State that they favour the retention of Section 229 of the Criminal Justice Act 2003, in the truncated form proposed by the Bill.
	I will explain, as briefly as possible, why the Government want to keep this part of the Bill as it is. Our changes in this Bill will, as we have already agreed, remove the statutory presumption of risk, which greatly limited judicial discretion in assessing risk, while leaving in place the remainder of Section 229, which sets out what matters the court may consider when assessing risk. Those, as the noble and learned Lord said, are set out in Section 229(2), which refers to previous offences and says that the court must take into account as well,
	"all such information as is available to it about the nature and circumstances of the"
	instant
	"offence ... may take into account any information which is before it about any pattern of behaviour of which"
	any of the offences mentioned in its paragraph (a) or new paragraph (aa)form part, and, lastly,
	"may take into account any information about the offender which is before it".
	We believe it is important to retain that statutory basis for the assessment of risk because it clarifies that the courts may look not just at the circumstances of the trigger offence, but take into account all such information as is available about the pattern of behaviour of which the offence formed part. That matter is of particular relevance to a court with a special responsibility for assessing an offender's prospective dangerousness, and a hallmark of public protection sentencing.

Lord Thomas of Gresford: My Lords, is the Minister saying that the courts do not already do that?

Lord Bach: My Lords, I am of course not saying that. I know that learned judges do that up and down the country. Perhaps the noble Lord, Lord Thomas, will hear me out before interrupting. In passing the Criminal Justice Act 2003, Parliament created a specific task for courts of assessing the dangerousness of sexual and violent offenders. The decision on risk would be made in the context of a new sentencing regime—one that has particularly serious ramifications for offenders who fall into its scope. I think we agree that those ramifications can be extremely severe. We believe that it was important to have clarity, from the beginning, on the breadth of information and evidence that a court can consider in assessing dangerousness in this new context.
	On Report, I referred to the case of Considine, and the noble and learned Lord, Lord Berwick, has made his analysis of it. That will perhaps teach me better, as a mere ex-junior member of the Bar, about trying to cross swords with the noble and learned Lord. If I were to have appeared before him in days gone by, the thought of that would have terrified me for the weekend before, but in what I hope is the safety of the House of Lords I will make my point on Considine.
	The noble and learned Lord asked whether we agreed that the Considine judgment showed that the new Section 229 would add nothing to the factors that a court would normally consider. The answer to that, to be absolutely blunt with the House, is that I do not think that it is particularly relevant to the issue that the House may have to decide in a few minutes whether we agree to that or not.
	As I explained, it would have been an omission for the Government to have failed to cover that point of the legislative scheme when we set up the legislation in 2003. The alternative would have been to trust the case law developed in other contexts in which dangerousness needed to be assessed and that that would be assessed and applied in the new context. We did not want to do that at the time because we wanted the new system to be clear from the very beginning, in view of the novelty and seriousness of the new sentencing proposals. As the noble and learned Lord told the House this afternoon, the courts did, in fact, by a process of case law development, confirm subsequently that the statute reflecting case law, derived in other contexts as to assessing dangerousness, is helpful. But does it follow that, because that is what the cases have decided, the statute is dispensable? We argue not. We do not believe that it is right to repeal the statute on the basis that subsequent case law would give courts the guidance that they need.
	It is, we think, particularly the case—although I think that the noble and learned Lord disagrees with us on this point—that a repeal of Section 229 would imply an intention to alter the law substantively. It has not been suggested that there is any need to change the position regarding the breadth of information that may be considered in the changes that we have made in this Bill. Indeed, we would argue that, given the wider changes that we are making to the public protection legislation, it is more important than ever that it remains in place. We think that repeal of Section 229 would therefore create a doubt where currently there is none. It is there in statute.
	For whose benefit will that be done? It is not necessarily for that of the learned judges who will of course have to pass sentences. However, I remind noble Lords that soundings that we have made suggest that a number of very senior judges who work in the criminal field are of the view that it would be helpful to keep this section in. We think that there are also significant presentational advantages in making it clear to criminal justice agencies and, perhaps, even to the general public, that previous convictions and the other kind of information that is relevant and lawful to be taken into account by a sentencing judge are very relevant to the assessment of risk. We believe that it is transparent—it is there in the statute—and we believe that it encourages confidence.
	Those are the arguments that the Government put in suggesting that, on balance, it would be advisable to keep this part of Section 229 on the statute book.

Lord Lloyd of Berwick: My Lords, I am very grateful to the noble Lord, Lord Bach, as ever, for his reply. I am always impressed by his arguments, and I am sure that I was impressed by the argument that he advanced in the case in which he said he appeared before me, although I cannot pretend that I remember much about it. However, there is one thing that he said that concerns me—his reference to the fact that he has consulted informally senior members of the judiciary. I am not sure that that is really good practice. I do not think that things should be referred to that have been discussed informally with the judiciary, because we are not in a position to know what exactly the judges have said. Indeed, I have consulted members of the judiciary about this and other clauses, but I do not think that those discussions should be referred to as an argument in support of an argument in this House.
	Having said that, I am not impressed with the answer, any more than I was with the letter from the Lord Chancellor, so I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 3) shall be agreed to?
	Their Lordships divided: Contents, 98; Not-Contents, 148.

Resolved in the negative, and amendment disagreed to accordingly.
	Clause 18 [Indeterminate sentences: determination of tariffs]:
	[Amendment No. 4 not moved.]
	Clause 28 [Release of prisoners after recall]:

Lord Kingsland: moved Amendment No. 5:
	Clause 28, page 20, line 9, at end insert "subject to the agreement of a Crown Court judge"

Lord Kingsland: My Lords, I shall speak also to Amendments Nos. 6 to 10. Amendments Nos. 5 to 9 refer to what is now Clause 28, which must be one of the most opaque clauses in the Bill and, when the Bill becomes law, it will become one the most opaque sections on the statute book. It deals with three distinct classes of offenders.
	The first group concerns offenders serving a determinate sentence for offences that are neither violent nor of a sexual nature. The second group concerns those who have received determinate sentences where they are serving sentences for crimes of a sexual or violent nature, or have been assessed as unsuitable for automatic re-release because they present a risk of serious harm. The third and final category covers those offenders who have committed sexual or violent offences and who are serving extended sentences.
	In the case of the first category of offenders, if they have been assessed as not presenting any risk of harm to the public and are recalled, the Bill stipulates that they will be in prison for a fixed period of 28 days, at which time they will automatically be re-released. Clause 28 gives the Government power by statutory instrument to alter the figure of 28 days. Two of our amendments seek to remove the power that is available to the Government in the Bill.
	In the case of the two other categories of prisoner to which I have referred, the Bill gives the Secretary of State and, in certain circumstances, the Parole Board the power to take decisions about the prisoner's release. Other amendments in our group affecting Clause 28—Amendments Nos. 5, 7 and 8—seek to insert an extra decision-maker in decisions about release; a Crown Court judge. We believe that it is wrong that decisions about the fate of such prisoners should lie solely in the hands of the Executive. We believe that someone who is properly qualified, outside the Executive, should also play a part in the decision-making process. That is why we propose to add to the Bill,
	"subject to the agreement of a Crown Court judge".
	There is one other amendment in the group, Amendment No. 10; it refers to Clause 30. It concerns the recall of those offenders who have received a life sentence but who are now out on licence. Once again, the Bill gives the discretion to recall those former prisoners to the Secretary of State and, in certain circumstances, to the Parole Board. A recent decision of the Court of Appeal suggested that the Parole Board, at least in certain circumstances, is not independent of the Secretary of State. Once again, we believe that another party should be involved in decisions about those who have received a life sentence but who are now out on licence. In this case, our amendment inserts a reference to the Lord Chief Justice.
	The background to these amendments was very fully debated in Committee and I do not propose to say anything further in support of them. I beg to move.

Lord Bach: My Lords, I am grateful to the noble Lord for tabling the amendments. These are important matters and they allow us to debate the provisions of the Bill relating to the release and recall of prisoners. Amendments Nos. 5, 7 and 8, amending Clause 28, have the effect that, where recalled determinate-sentence prisoners have been assessed by the Secretary of State as safe to re-release, there would be a requirement for their cases to be referred to the Crown Court so that the court could review that decision.
	Our main concern at this proposal is that it would place a substantial added burden on the Courts Service. To give some indication of the scale of this burden, in 2007-08 the Parole Board conducted over 14,000 recall reviews. We are also of the opinion that the process for dealing with such referrals would be slow and bureaucratic. Prior to 1999, all recalls in respect of prisoners serving less than four years had to be pursued through the courts. It was a more complex process which was rarely used, but it was one of the reasons why we extended executive recall provisions in the first place. We are not convinced that the proposal would enhance public protection in any significant way.
	I remind the House that prisoners serving sentences for sexual or violent offences are automatically precluded from being given a fixed-term or 28-day recall. Those serving sentences for offences other than sex or violence can be given a fixed-term recall only if they are assessed as not presenting a risk of serious harm.
	I also remind the House that all recalled prisoners have a right to have the recall decision reviewed by the independent Parole Board, thus providing offenders with a means of redress. Our recall provisions are designed, frankly, to reduce the burden on the Parole Board and on the Prison Service and will assist in achieving our objective to focus prison and the Parole Board's resources on the most dangerous offenders. We have carefully considered the noble Lord's amendments but I am afraid we cannot accept them.
	Amendment No. 10 seeks to amend Clause 30 in respect of the recall of life and indeterminate-sentence prisoners. I can assure the House that we recognise that recalling a life-sentence prisoner has potentially serious consequences. It could result in the offender spending the rest of his or her life in custody. That is why such decisions are not taken lightly and why all such decisions are subject to review by the Parole Board. Amendment No. 10 requires all recalls of life or indeterminate-sentence prisoners to have the approval of a judge.
	We fear that this amendment would build a potential source of delay in the recall process, during which further serious crime could, unfortunately, be committed. The purpose of recall action is to enable the Secretary of State to take swift and preventive action in removing potentially dangerous offenders from the community. We think it is a crucial means of public protection. The current provisions for the recall of a life-sentence prisoner—this is an important issue but I shall be as quick as I can—are to be found in Section 32 of the Crime (Sentences) Act 1997. That section provides two routes for recall. Section 32(1) enables the Secretary of State to recall, having first consulted the Parole Board and received a positive recommendation. But Section 32(2) enables the Secretary of State to recall a life-sentence prisoner without prior consultation with the board where it is,
	"expedient in the public interest to recall that person before such a recommendation is practicable".
	The clear inference of the statute as it now stands is that in the majority of cases a lifer recall will be pursued through the Section 32(1) route—the Parole Board route—and that the Secretary of State will recall a lifer without prior consultation with the Parole Board only where such consultation is not possible in an individual case.
	The House will know that for life-sentence prisoners released into the community on life licence, the threshold for recall is high. An increased risk of reoffending by itself is not sufficient to warrant recalling them to prison. The Secretary of State must be satisfied that the prisoner presents an unacceptable risk to life and limb. To warrant a life or indeterminate sentence it follows that a prisoner will have been convicted of the most serious sexual or violent offences. When their conduct has deteriorated to such a degree that they are assessed as presenting an unacceptable risk to life or limb, it is invariably in the interests of public protection that the recall process facilitates their swift removal from the community.
	In practice therefore, nearly all recalls are effected administratively as we speak. We accept that there is no limit on the number of cases that may be decided under the public expediency recall procedure—that is, Section 32(2), which gives the Secretary of State his powers. However, the spirit of the legislation leans towards the primary mechanism for deciding to recall a lifer through a Parole Board recommendation. But in the period from October 2002 to March 2007 more than 80 per cent of decisions to recall lifers were made without a Parole Board recommendation. I can reassure the House that those decisions have been entirely correct in law on the basis that it was expedient in the public interest for the Secretary of State to exercise his power of executive recall without consulting the Parole Board.
	Nevertheless, we are concerned to ensure that the statutory framework reflects current operational practice, and that the operational practice could not be seen as undermining Parliament's intention. For that reason, Clause 30 places our current operational practice on a firm statutory footing. We also recognise that it is critical that there are strong and effective safeguards in place to ensure that the decision taken by the executive is open to challenge by the offender, and even if not challenged, is open to robust scrutiny by an independent body. That is what the review by the Parole Board achieves.
	The Parole Board will invariably have an oral hearing to consider the representations of life-sentence prisoners. Such hearings are normally chaired by a judicial member. The prisoner is entitled to be present, legally represented, and to call witnesses. The board has the power to direct the prisoner's immediate re-release if it is satisfied that it is safe to do so. This is a question of balance and we recognise that it is important to strike the right one between being able to take swift, preventive action to protect the public on the one hand, and ensuring that such decisions are subject to robust scrutiny. That is why we believe that putting Clause 30 into the Bill is the appropriate measure to achieve that balance.
	I can be shorter and more helpful to the noble Lord, Lord Kingsland, on his two remaining Amendments Nos. 6 and 9. They would remove the power to amend the period of time an offender must serve before being automatically re-released if given a fixed-term recall or the period other recalled offenders must serve before the Secretary of State must refer their case to the Parole Board.
	Having given careful consideration to these amendments, and expressing our gratitude to the noble Lord, Lord Kingsland, in particular, and having listened to other noble Lords in debate, we are prepared to accept those two amendments. We will need to bring forward a consequential amendment when the Bill returns to another place.

Lord Kingsland: My Lords, first, I am most grateful to the Minister for acceding to Amendments Nos. 6 and 9. No doubt there will be certain changes in the drafting by the Government in order to stamp their own inimitable character on these provisions.

Lord Bach: My Lords, the noble Lord's point should be called the "Hunt rule", as it was clearly expressed by my noble friend: no Government ever accept an amendment, however perfectly drafted, by the Opposition.

Lord Kingsland: My Lords, it will come as no surprise to the Minister to learn that I am disappointed by his reaction to our other amendments. He underlined the importance of speed and effectiveness in the recall process in relation both to those categories in Clause 28 to which I referred and to the life sentence category in Clause 30. I understand that those are important considerations.
	On the other hand, individuals are effectively having their liberty removed from them, often for a very long subsequent period. In my submission, the judicial arm of the constitution ought to play a role in that decision. That is what lay at the heart of our amendments. The Minister has been adamant: he will give no ground. I thought very carefully about what I should do at Third Reading. In the end, I have decided not to press these amendments, but I would not want the Minister to think that strong feelings on the part of the Opposition did not lie behind them. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Kingsland: moved Amendment No. 6:
	Clause 28, page 20, leave out lines 42 and 43
	On Question, amendment agreed to.
	[Amendments Nos. 7 and 8 not moved.]

Lord Kingsland: moved Amendment No. 9:
	Clause 28, page 22, leave out lines 28 and 29
	On Question, amendment agreed to.
	Clause 30 [Recall of life prisoners: abolition of requirement for recommendation by Parole Board]:
	[Amendment No. 10 not moved.]
	Clause 41 [Power of Court of Appeal to disregard developments in the law: England and Wales]:

Lord Davidson of Glen Clova: moved Amendment No. 11:
	Clause 41, leave out Clause 41 and insert the following new Clause—
	"Power to dismiss certain appeals following references by the CCRC: England and Wales
	After section 16B of the Criminal Appeal Act 1968 (c. 19) insert—
	"Appeals following references by the CCRC
	16C Power to dismiss certain appeals following references by the CCRC
	(1) This section applies where there is an appeal under this Part following a reference by the Criminal Cases Review Commission under section 9(1)(a), (5) or (6) of the Criminal Appeal Act 1995 or section 1(1) of the Criminal Cases Review (Insanity) Act 1999.
	(2) Notwithstanding anything in section 2, 13 or 16 of this Act, the Court of Appeal may dismiss the appeal if—
	(a) the only ground for allowing it would be that there has been a development in the law since the date of the conviction, verdict or finding that is the subject of the appeal, and(b) the condition in subsection (3) is met.
	(3) The condition in this subsection is that if—
	(a) the reference had not been made, but(b) the appellant had made (and had been entitled to make) an application for an extension of time within which to seek leave to appeal on the ground of the development in the law,the Court would not think it appropriate to grant the application by exercising the power conferred by section 18(3).""

Lord Davidson of Glen Clova: My Lords, we agreed on Report to bring forward these amendments, which restrict the scope of Clauses 41 and 42 to cases referred to the Court of Appeal by the Criminal Cases Review Commission. The noble and learned Lord, Lord Lloyd of Berwick, had tabled his own amendments to this effect but, as I explained then, the Government consider that the wording here, while slightly longer, is necessary to ensure precision. I trust that it may be accepted that this is not wholly within the Hunt rule on amendments.
	Amendment No. 11 inserts into the Criminal Appeal Act 1968 a new Section 16C. It will apply only in cases where the Court of Appeal is determining an appeal referred to it by the Criminal Cases Review Commission, and where the only ground for allowing the appeal is that there has been a development in the law since the date of conviction. In such cases, it would be open to the court to dismiss the appeal if it would have refused an extension of time within which to seek leave to appeal; if, hypothetically, the court had been considering an out-of-time application by the appellant rather than a reference by the Criminal Cases Review Commission. Amendment No. 12 makes the equivalent provision for Northern Ireland, and Amendment No. 54 makes the equivalent provision for the Armed Forces. Amendments Nos. 55 and 56 are transitional provisions. I hope that the noble and learned Lord, Lord Lloyd, will accept that the substance of his amendments is reflected in the Government's amendments. Our joint objective is to secure that the Court of Appeal is no longer obliged automatically to quash convictions in the relevant cases. I beg to move.

Lord Lloyd of Berwick: My Lords, one only has to compare the clause as it now appears in Amendment No.11 with the clause as it appears in the Bill to see what a very marked improvement the amendment has made to the existing Bill. I am very glad that that has happened and I extend my welcome to it. It achieves exactly what needed to be achieved, neither more nor less. I support the amendment.

Lord Thomas of Gresford: My Lords, we on these Benches congratulate the Government on another climbdown on the Bill. We are pleased to see that the amendment has been put through.

On Question, amendment agreed to.
	Clause 42 [Power of Court of Appeal to disregard developments in the law: Northern Ireland]:

Lord Hunt of Kings Heath: moved Amendment No. 12:
	Clause 42, leave out Clause 42 and insert the following new Clause—
	"Power to dismiss certain appeals following references by the CCRC: Northern Ireland
	After section 13A of the Criminal Appeal (Northern Ireland) Act 1980 (c. 47) insert—
	"Appeals following references by the CCRC
	13B Power to dismiss certain appeals following references by the CCRC
	(1) This section applies where there is an appeal under this Part following a reference by the Criminal Cases Review Commission under section 10(1)(a), (6) or (7) of the Criminal Appeal Act 1995 or section 1(1) of the Criminal Cases Review (Insanity) Act 1999.
	(2) Notwithstanding anything in section 2, 12 or 13A of this Act, the Court of Appeal may dismiss the appeal if—
	(a) the only ground for allowing it would be that there has been a development in the law since the date of the conviction, verdict or finding that is the subject of the appeal, and(b) the condition in subsection (3) is met.
	(3) The condition in this subsection is that if—
	(a) the reference had not been made, but(b) the appellant had made (and had been entitled to make) an application for an extension of time within which to seek leave to appeal on the ground of the development in the law,the Court would not think it appropriate to grant the application by exercising the power conferred by section 16(2).""
	On Question, amendment agreed to.
	Clause 62 [Possession of extreme pornographic images]:

Baroness Miller of Chilthorne Domer: moved Amendment No. 13:
	Clause 62, page 49, line 31, leave out paragraph (b) and insert—
	"(b) is obscene as defined by section 1 of the Obscene Publications Act 1959 (c. 66) (test of obscenity)."

Baroness Miller of Chilthorne Domer: My Lords, there are many things in these clauses about extreme pornography with which we on these Benches remain deeply unhappy. On Report, the Minister did not explain why he could not move at least a little nearer the Obscene Publications Act 1959. Linking these clauses to that Act would have made the measure more objective, and less subjective, and would have had the other strength of targeting the producers of such material rather than the end user. It would target those who are making vast amounts of money out it.
	In Committee, the noble Baroness, Lady Kennedy of The Shaws, had a suggestion, but the Government did not take up, to make it illegal for credit card companies to allow the spend on extreme porn sites. I thought that was a constructive suggestion that the Government had not chosen to pursue.
	The other reason to link these clauses to the Obscene Publications Act is that that is a tried and tested definition in court. It talks of material that tends to "deprave and corrupt" as opposed to "extreme", which the Minister admitted at Report stage is a very subjective judgment. It is something that he does not like.
	I appreciate that the Minister feels that "deprave and corrupt" is old-fashioned language and not suitable, but it has stood the test of time in court for printed material and it addresses what the Government say they are trying to do with these clauses. The Government want to stop people becoming depraved and corrupted and therefore more likely to commit criminal acts. I will come back to whether there is enough evidence of that—and I will contend that anyway. The legislation as drafted does simply allows the word "extreme". Although theBill defines that word, when a case comes to court it is going to give juries a great deal of difficulty when they start to look at it in any detail.
	The legislation allows the police to pick up someone watching this material before they commit any crime, before they actually cause any harm to another person. The Government may be right that the person might have gone on to commit such a crime, but often they may be arresting somebody who has strange tastes, ones we might find repugnant, but who is never going to harm anyone else and is no threat to society. Their life is likely to be ruined by the subsequent court case, even if it fails or if the accused is successfully produces one of the defences. That is truly the domain of the thought police. These clauses are the state entering the bedrooms and minds of citizens before they commit any crime that involves harm to another human being.
	I know that the Minister will again quote the evidence. However, the academic world is not of one voice on the effects of this material. A number of academic studies quoted by the Minister show that extreme pornography may affect violent criminals—people who had criminal intent in the first place. On the other hand, he could have chosen to quote from Professor Todd Kendall who presented his paper to Stanford Law School. It showed that as the United States brought in access to the internet at a different rate in the 50 states—not intentionally—a 10 per cent increase in internet access yielded a 7.3 per cent decrease in reported rapes. The purpose of quoting that is to show that different academic studies show different things.
	I now turn to Amendment No. 15, which concerns the tariffs. Will the Minister explain why the tariffs are as they are for simply watching an act, when committing the act results in a lesser or equal tariff? Surely it is much worse to commit an act under the Sexual Offences Act than to watch it on the internet. I want also to ask him about the guidance that he will issue to the police. How on earth are the police going to enforce this law? Will it be by random raids on people's bedroom, by reports from neighbours or by trawling through hacked internet access? Policing this area will be a nightmare when it comes to otherwise law-abiding citizens watching alone or with their partners things that we may find distasteful or even disgusting. This affects an awful lot of British citizens. I have no way of telling whether extreme or just ordinary pornography is involved, but internet service providers estimate that about £1 billion a year is spent on pornography. That is either 1 million people spending £100 or—my maths is failing me. Anyway, it is a lot of people.
	There is another route that the Government could have chosen to take that might have been very constructive. It would have been to set up a government website that allowed the reporting on non-consensual abusive acts, slightly along the lines of Crimestoppers. That would have allowed users to report anything truly criminal or suspect and would have led to the arrest of genuine sexual offenders from whichever country they originated. That idea could be put into practice and would be very cost-effective.
	We feel that the Government have gone down a number of wrong routes with this Bill, and that is we why we have tabled this amendment. I beg to move.

Lord McIntosh of Haringey: My Lords, I apologise to the noble Baroness, Lady Miller, for not putting my name to Amendments Nos. 13 and 15 in time. My opposition to these clauses is undiminished. I listened carefully to the reply that my noble friend Lord Hunt made in the debate on Report. He spoke with great passion and sincerity, and I admire him for that, but unfortunately the quality of his arguments did not match up to the passion and sincerity with which he made them.
	This is fundamentally about an intrusion in the harmless private lives of ordinary citizens in this country. On Report, I spoke about the Video Recordings Act 1984. I did not repeat one of the juiciest pieces about it. Until that time, we had a British Board of Film Censors, which was not a censorship board. It classified films, and if it refused to classify them, they could still be shown with the permission of local authorities. The Video Recordings Act 1984 changed the board from being a classification board to being a censorship board because if a video recording was not approved by the board, it could not be shown at all. From being a classification board, it became a censorship board, but its name changed from being a censorship board to a classification board. George Orwell would have been proud.
	I am enthusiastic about Amendment No. 13 because it seeks to get round the horrible situation which the Government are putting us in by adding an extra gloss to the Obscene Publications Act 1959. I would support the noble Baroness, Lady Miller, if she chose to divide on that.
	I am less enthusiastic about Amendment No. 15, not because it is not right in itself, but because I simply do not believe that any jury will convict a citizen of this country for possessing what it is not illegal to produce. The noble Baroness, Lady Miller, gave the reason of needing inspectors with the right of entry to people's homes, sitting rooms, bedrooms, video machines and DVDs. Is that really what the Government are proposing? There is no other way of enforcing it. If they succeed in doing it, however they succeed in doing it, what jury is going to convict people for possessing what it is not illegal to produce? The Government, despite all the sincerity of the noble Lord, Lord Hunt, have failed to answer any of these arguments.

Baroness Howe of Idlicote: My Lords, I am very pleased indeed that these amendments have allowed one to have another look at this whole area, because it was a mistake not to have allowed us on Report to discuss a similar route to the one agreed for the clauses dealing with sex workers for the clauses in this Bill about extreme pornography. In other words, they should be taken out of the Bill. I hoped that your Lordships would have had an opportunity to debate both sides of the concern that lay behind those amendments.
	The human rights aspect was rightly aired. However distasteful to many, including myself, if people choose to watch extreme or kinky pornography in the privacy of their own home, and that is not breaking the law, the state should not be involved. It was argued by the organisation backlash, among others, that this law as currently drafted is likely to criminalise hundreds of thousands of people who use violent pornographic images as part of consensual sexual relationships. It also argues that some of the RAE research was inaccurate and biased. The other, equally important, concern is whether extreme pornography could be harmful, in the sense of generally brutalising, to citizens. I am reminded of when I was asked to watch an experiment at the LSE with two groups of undergraduates. One group watched some rather violent material, and the other was shown, gradually, up to a point, fairly placid stuff. At that point, they were both shown some pretty violent stuff. The first lot, who had got used to seeing what they were shown—rather more violent stuff—did not react at all, while the other group was horrified. That is quite important.
	Of far greater concern, as has been mentioned, is the possible effect on sick or vulnerable people who might fantasise about what they are viewing and go on to commit violent crime against members of the public. That was argued forcefully in the other place by Martin Salter MP, quoting the case of Jane Longhurst. In most cases, as we know, these offences are committed against women. Both areas of concern combine to make a strong case for a far more professional look at this whole subject, not least in view of the growing use of the internet, and other forms of IT equipment, to access this kind of extreme material, and the lack of any significant powers for Ofcom to intervene.
	As one who, in the 1990s, when chair of the Broadcasting Standards Commission, had responsibility for monitoring the early days of pornography, I have absolutely no doubt of the huge growth in both the quantity and the extreme nature of today's material. No doubt, if we had followed the Minister's advice and gone to the police station to see the evidence that he had to endure, that would have graphically confirmed my view.
	Despite the proposal that I had hoped to make earlier—that, like the clauses on prostitution, these extreme pornography clauses could be referred for further expert study and not form part of the Bill—I still urge the Minister and the Government to establish an expert commission or Select Committee to take evidence and examine this whole area in far greater detail. It is a growth area of citizen concern which will not go away.

Lord Monson: My Lords, as I indicated on Report, I broadly support the Liberal Democrats and the noble Lord, Lord McIntosh, on this matter. However, one thing puzzles me about Amendment No. 15: it does not allow for a fine to be imposed on conviction or indictment, unlike the clause as it stands. The overcrowding in our prisons will not be ameliorated at any time in the foreseeable future. It seems to be a defect that there is no possibility of a fine in that case.

Lord Thomas of Gresford: My Lords, on Report, I asked the Minister the purpose of this new offence. Was it to discourage criminal sexual acts being filmed, or was it to discourage people from watching porn? The Minister's answer was something of a surprise: he wished to criminalise the gratification of the individual in watching pornography in the privacy of his own home. That is one thing, but it seems completely illogical to make that a more serious offence than the act which—if it is criminal—the individual is watching. I ask the Minister to reflect on whether he can in any form of logic maintain his opposition to these amendments.

Lord Faulkner of Worcester: My Lords, I was not intending to speak but I want to add my support for what the noble Baronesses, Lady Miller and Lady Howe, and my noble friend Lord McIntosh have said in this short debate. From Committee stage onwards we have been consistent on this issue. I very much appreciated the support that the noble Baroness, Lady Miller, gave me in my efforts to remove the street offences clauses at an earlier stage, and I very much commended my noble friend Lord Hunt for agreeing to do that. It is a great pity that he has not taken these clauses out as well. With the greatest respect to him, he has not made the case that they are necessary, workable or desirable. As my noble friend Lord McIntosh said, he made a brilliant speech on Report, full of passion and full of commitment; but his main point and main argument in favour of these clauses was that it is necessary to satisfy the public demand, because the public do not like what they think is available. They do not know quite what is available but they do not like it and the law, therefore, must make it impossible for it to be accessed.
	My worry is that if you adopt laws on that basis, you will finish up with something that is unworkable. As my noble friend Lord McIntosh said, it is almost impossible to imagine that a jury will convict someone on the basis of viewing an activity, the activity itself not being the subject of a criminal act. I think that the law will be brought into disrepute if the Government persist. I, too, support the noble Baroness, Lady Miller. I commend her courage and honesty and the way in which she has campaigned on this through three stages of the Bill. I hope she does not give up.

The Earl of Onslow: My Lords, first, I must apologise to your Lordships for arriving slightly late for this amendment. I, too, support it. I feel that the Government are doing their old-chum gesture politics. They are "sending a signal". That is a very bad basis for passing laws. We know that this is not unique to this Government. I can almost guarantee that after the next general election, when I might be sitting on that side of the House and other Members might be sitting on this, I will make exactly the same criticism of an incoming Conservative Government. It is a habit which Governments find it irresistible to resist. But the logic of what the noble Lord, Lord McIntosh, and the noble Baroness, Lady Howe, said, and the expressed views of the Joint Committee on Human Rights, on which I have the honour to sit, support that position. Even with the concessions coming in the next clause, it is an awful pity that this amendment will not be agreed to.

Baroness Butler-Sloss: My Lords, for the reasons that have been given by a number of other noble Lords, I, too, urge the Government, even at this late stage, to rethink these clauses. The provision is potentially unworkable. In view of the advantages of the noble Baroness's amendment, I very much support it.

Lord Hunt of Kings Heath: My Lords, I also am grateful to the noble Baroness, Lady Miller, for allowing us to come back and debate this important matter. The principle was decided on Report, and this debate has in a sense been a rerun of that debate on principle. That is fair enough. I fully understand the probing nature of the noble Baroness's amendments.
	I very much accept the point made by the noble Baroness, Lady Howe, and endorsed by my noble friend Lord Faulkner, that this is but one element of a number of matters in this area. The noble Baroness has eloquently argued for a Select Committee of this House to look at these issues in general. Although that is always a matter for the House itself, I am sure that the Government will always co-operate and be happy to give evidence to any such initiative that the House takes forward. She might then say, "Well, you ought to take this away until the investigation has been completed". She will know that I am reluctant to do so. However, I take her point that some substantive issues need to be discussed, including those issues on prostitution.

The Earl of Onslow: My Lords, in the Minister's comments one suddenly sees a chinkette of light. In those circumstances, will he ask, through the usual channels, for a Select Committee? He shakes his head in the wrong way. Perhaps I shall take rather less notice of his charm on this issue than I thought that I should.

Lord Hunt of Kings Heath: My Lords, the noble Earl is always tempting me down paths I ought not to go. It is not for the Government to suggest to Parliament what it ought to do in matters governing its own affairs. If I were to do that, I would be out of order. I recognise that the noble Baroness, Lady Howe, has expressed a legitimate concern that many issues around sexual behaviour need to be addressed. All I was saying is that this is entirely a matter for this House. However, there are ways in which we may debate these matters: in Thursday debates, in Questions for Short Debate, or, if the House authorities agree, by setting up a special Select Committee.
	As noble Lords will know, there was a great deal of controversy over the authorities' decisions on a number of proposed Select Committees. Noble Lords will remember, for instance, the arguments over whether there should be a Select Committee on the Barnett formula. My noble friend Lord Barnett, who is not present today, would remember. I am simply saying that I recognise the point raised by the noble Baroness. These are important matters and Parliament has an important role in discussing them.

Baroness Howe of Idlicote: My Lords, I am most grateful to the Minister for giving way and for what he said. However, I should hope that is a matter of concern for both Houses and that a Joint Committee can therefore be set up.

Lord Hunt of Kings Heath: My Lords, that takes me down even more dangerous paths by asking me as a Minister to suggest what the other place should do. But I take the noble Baroness's point.
	I thank my noble friend Lord McIntosh for his kind remarks, although he went on to say that he did not think much of my arguments. I was interested in his recollection of the great days of local government, when it had a role in deciding whether films could be shown in a local authority area. As a member of Oxford City Council in the 1970s I well recall Alderman Fagg chairing a sub-committee of the estates committee which viewed these films on Monday morning at 10 o'clock. I confess that we debated these matters and that I argued that there should be no censorship of any film and it was all unnecessary. Well, I have changed my mind. The noble Lord, Lord McIntosh, has not. He has been a model of consistency over many years on these matters.
	Over the past few days I have received many e-mails from many organisations. I understand, of course, my noble friend's concern about unnecessary intrusion into harmful activities in people's own bedrooms. However, we are not talking about what might be described as the routine pornography which I am sure accounts for much of the billion pounds and the—as the noble Baroness suggested, though I am not sure how many people—million people; we are talking only about extreme or violent pornography. I want to make that clear.
	The noble Baroness asked me to explain in detail why the Obscene Publications Act and its definitions were not used in the formulation of this clause. This legislation has been proposed because the controls in the Obscene Publications Act are much more easily evaded these days by the use of modern technology, namely the internet, which makes it much easier to use and distribute and therefore easier to possess. As most such extreme material is hosted abroad, controls on publication and distribution are no longer sufficient.

Lord McIntosh of Haringey: My Lords, I am sorry to interrupt the Minister. The issue is not about the controls. The issue is about the definitions. The definitions in the Obscene Publications Act have worked for almost 50 years. Changes in the difficulty of control do not affect that argument at all.

Lord Hunt of Kings Heath: My Lords, I do not think I was arguing that. I was trying to answer the first question posed as to why we are bringing forward this legislation at all. The second question, relating to the noble Baroness's first group of amendments, is why we have not we have not used the Obscene Publications Act. Her amendment removes the element of the offence which requires that an extreme pornographic image depicts an extreme image and replaces it with a reference to the definition of "obscene"; namely, the "deprave and corrupt" test, which, as she says, is found in Section 1 of the Obscene Publications Act 1959. Her amendment also has the effect of rendering redundant subsections (6) and (7). Those subsections set out the,
	"grossly offensive, disgusting or otherwise of an obscene nature",
	test and the list of extreme acts. The amendment has the effect of opening up the offence to all obscene pornography. It would no longer be limited to certain specified depictions of threatening, violent, bestiality or necrophilia images. The noble Baroness may wish to consider the implications of that when she comes to wind up.
	My officials and the department, when considering this matter over the months that it has taken to prepare the Bill, saw the initial attraction of linking this possession offence to the existing publication offence. Under the Obscene Publications Act, whether material is obscene depends on whether it would deprave and corrupt those most likely to read, see or hear it. That "deprave and corrupt" test works by reference to the likely audience. In the context of possession there is no audience. Directly importing the deprave—

Baroness Miller of Chilthorne Domer: My Lords, there is an audience of one, who is about to be criminalised should this Bill be passed. How could the officials or the Minister come to the conclusion that there was no audience?

Lord Hunt of Kings Heath: My Lords, directly importing the "deprave and corrupt" test into this offence would have the effect of requiring the possessor of the material to consider its effect on himself. The possible perverse consequence of that could be that less sexually aware members of society become more at risk of committing an offence than habitual users of pornography. So it is clear that the test would have to be adapted. It is not a simple case of referencing. We explored the feasibility of adapting the Obscene Publications Act but concluded that our approach is to be preferred.
	The Obscene Publications Act offence is not limited to specified material, but, rather, catches anything which passes the "deprave and corrupt" test. By contrast, the approach that we have taken with this possession offence is to target only specified material. Even if we had used an adapted version of the Obscene Publications Act obscenity test, we would still have had to limit it by reference to specified acts.
	As the amendment of the noble Baroness, Lady Miller, has the effect of rendering redundant the subsection (7) list of specified acts, it opens up the clause to cover a much broader range of pornography—anything which could pass the "deprave and corrupt" test. I am advised that it could catch the depiction of degrading sexual acts such as drinking urine or smearing excrement on a person's body. In that respect, the noble Baroness's amendment might widen the offence significantly.
	We do not consider that by not providing for a direct read-across to the Obscene Publications Act test we open up any significant risk that material could be caught by this possession offence which it would be lawful to publish. It is not our position that the words,
	"grossly offensive, disgusting or otherwise of an obscene character"
	are synonymous with the wording of the "deprave and corrupt" test. Rather—I repeat the points that I have made at earlier stages—it is that the three elements of the offence, the "pornography" test, the "explicit realistic extreme act" test and the "grossly offensive, disgusting or otherwise of an obscene character" test, when taken together, should ensure that the offence captures only material which it would be illegal to publish by virtue of the "deprave and corrupt" test within the Obscene Publications Act.
	Amendment No. 15 would reduce the maximum prison sentence available to Crown Courts to deal with the possession of material described in Clause 62(7)(a) and (b) from three years to two years, making it the same as the maximum penalty proposed for bestiality and necrophilia material falling under Clause 62(7)(c) and (d). I have listened carefully to the points raised on this. In considering the penalties for these offences, it is clear that we have considered carefully proportionality with regard to existing criminal offences. We certainly think it right that the maximum penalty for possession of extreme pornographic material should fall below that available for the more serious offence of possession of indecent photographs of children, which is five years maximum. It should fall below also that available for publication, distribution and possession for gain offences under the Obscene Publications Act, which in Clause 69, as your Lordships will be aware, we are raising from three to five years. These are also more serious offences. Further, the penalties should not exceed the maximum penalty available for certain substantive offences potentially committed in making pornography, such as those in the Sexual Offences Act 2003 in relation to offences with animals and corpses which carry maximum penalties of two years.
	The sentencing levels that we propose are proportionate, bearing in mind the high threshold levels for this offence. I stress that we are not talking about the kind of soft porn to which many noble Lords have referred and which has been referred to in the letters and e-mails that I have received in the past few weeks. It is material that should not be in circulation in this country. I say again that the increased availability of this material is a direct result of the impracticality in the internet age of controlling its circulation by targeting the publishers under the Obscene Publications Act 1959. We think it right to give the courts the means to reflect greater concern about the material featuring extreme sexual violence, whether real or simulated, than is the case for material which is degrading but non-violent. That is the reason for the distinction in the maximum penalties between the categories set out in Clause 62(7).
	There are two other points to be made on the noble Baroness's amendment to the penalty provision. First, her amendment removes, perhaps inadvertently, the capacity of the Crown Courts to impose a fine. Secondly, it deletes the transitional provision of subsection (4), which is required to provide for future changes to the sentencing powers of magistrates' courts in England and Wales.
	On the issue of policing, I hope that I can reassure noble Lords. The police have welcomed this offence. They see it as a further means to take illegal material out of circulation and an additional tool to deal with individuals whose behaviour may be causing concern. This is not, I suggest, a case of policing the bedroom. It is intended to target only the most extreme pornography. We believe that the number of prosecutions will be relatively small, but my understanding—from advice that I have received—is that the offence will be a valuable additional resource for officers already working on protecting the public in this area. I also give an assurance that this offence will not be commenced before a full explanation of it is given to the police and to the courts.
	I am aware that this area is controversial. We discussed the principle on Report, and I hope that I have, at the very least, provided some explanation to the noble Baroness of the approach that the Government have taken. She will now have to consider her position.

Baroness Miller of Chilthorne Domer: My Lords, I thank very much all those noble Lords and noble and learned Lords who have spoken. This difficult area is one that I would have found it lonely to do alone, so I particularly thank your Lordships for expanding—better than I can, in all cases—on why these clauses are, in our view, particularly unworkable.
	As the Minister says, we dealt with the principle on Report, so the point of coming back at Third Reading is to offer the Government a small chance to make these clauses slightly less unworkable—and slightly more reasonable—especially in the light of the history of courts trying to deal with this difficult area, and of juries understanding what is going on. I am particularly glad that the noble Baroness, Lady Kennedy of The Shaws, has joined the House at this point. She has spoken before about how difficult juries find this issue, and obviously has wide experience of why that is so.
	This really comes down to the contention that these clauses are, as the noble Earl, Lord Onslow, said, put there to send a signal more than anything else. There was great consensus that they are really unworkable and do not address the issue that the Government are trying to address here. Perhaps the most chilling point in the Minister's summing up—I thank him for going into some detail—was that when it came to policing this it was for dealing "with individuals" who are "causing concern". Well, that is pretty difficult. How are they causing concern if they have committed no crime yet? They might be causing concern in all sorts of ways; they might be individuals whom the police do not much like, for a number of reasons, but then they get raided. Again, that really makes me feel worried. This is, as the noble Baroness, Lady Howe of Idlicote, said, all to do with human rights. It would have been better to look at this in the cool light of day. I am sorry that the Minister has resisted the idea. I know that he cannot call for it, but he could put on the pressure to create a Select Committee to look at the whole issue of violence in the media. That, I think, is what really concerns noble Lords.
	I hope that, in this instance, the Conservative Benches will indicate whether they support these poorly drafted and unworkable clauses. I have a feeling that, should I test the opinion of the House, they will simply abstain. That would be a pity, as they are usually strong on trying to improve a Bill as the Liberal Democrat Benches are trying to today. It is quite clear that we feel there is still room for improvement. For that reason, I beg leave to test the opinion of the House.

On Question, Whether the said amendment (No. 13) shall be agreed to?
	Their Lordships divided: Contents, 91; Not-Contents, 134.

Resolved in the negative, and amendment disagreed to accordingly.

Lord Hunt of Kings Heath: moved Amendment No. 14:
	After Clause 64, insert the following new Clause—
	"Defence: participation in consensual acts
	(1) This section applies where—
	(a) a person ("D") is charged with an offence under section 62, and(b) the offence relates to an image that portrays an act or acts within paragraphs (a) to (c) (but none within paragraph (d)) of subsection (7) of that section.
	(2) It is a defence for D to prove—
	(a) that D directly participated in the act or any of the acts portrayed, and(b) that the act or acts did not involve the infliction of any non-consensual harm on any person, and(c) if the image portrays an act within section 62(7)(c), that what is portrayed as a human corpse was not in fact a corpse.
	(3) For the purposes of this section harm inflicted on a person is "non-consensual" harm if—
	(a) the harm is of such a nature that the person cannot, in law, consent to it being inflicted on himself or herself; or(b) where the person can, in law, consent to it being so inflicted, the person does not in fact consent to it being so inflicted."

Lord Hunt of Kings Heath: My Lords, during our debate at Report, I said that the Government intended to address the concerns expressed by the noble Lord, Lord Wallace, and others, about individuals who keep a record of themselves freely and willingly participating in bondage, domination, submission and sadomasochistic practices in which no unlawful harm occurs. We recognise that it would be anomalous if participants in perfectly lawful acts were to be at risk of prosecution for possession of images portraying those acts. We have introduced an amendment which creates a new defence of participation in acts in which no unlawful harm occurs. The defence will apply in respect of images which meet the very high threshold for the offence. The defence will not apply in respect of bestiality images or necrophilia images which involve a real corpse.
	In respect of other material, it will be a defence for a person to prove, on the balance of probabilities, that he or she directly participated in the act or any of the acts portrayed and that the act or acts portrayed did not involve the infliction of any non-consensual harm on any person.
	The defence that we are proposing does not amend the law in the wider area that was set out in the House of Lords case of R v Brown—a decision that the European Court of Human Rights found not to be an infringement of Convention rights. However, the defence is constructed so that, if the law on that point should change in the future, the defence would not move it. I hope that this defence will give reassurance to those who participate in legal and consensual acts of which they wish to keep a photographic record. I beg to move.

The Earl of Onslow: My Lords, when members of the Joint Committee on Human Rights were told that the Minister was going to move this amendment, we all said, "Yippee" or words to that effect, so I would like to thank the Minister for going as far as he has. There is a question of moving millimetres rather than metres, but one must be thankful for small mercies; on behalf of the Joint Committee, I would like to say, "Thank you for the millimetres".

Lord Wallace of Tankerness: My Lords, I raised these matters in Committee and at Report and I also want to express appreciation for the amendment introduced by the Minister, which addresses the issue of someone having a record of his or her participation in a consensual act. The noble Earl, Lord Onslow, is right that it is millimetres rather than metres. As I understand it, a person may have a photograph and although he himself is not present in the photograph, he could lead witnesses to establish that the act was consensual. But that defence will not be open to him. I regret that that is an issue that will come up in a court case and show again the fundamental misgivings that many of us have about these clauses as a whole. Nevertheless, it is only appropriate to acknowledge where a step in the right direction has been made and I am grateful to the Minister for that.

Lord McIntosh of Haringey: My Lords, it would be discourteous for me not to join in. I rather liked word "chinkette" used by the noble Earl, Lord Onslow. This is something rather than nothing and we are modestly grateful.

Lord Hunt of Kings Heath: My Lords, I am overwhelmed by the modest gratitude of the House.

On Question, amendment agreed to.
	Clause 65 [Penalties etc. for possession of extreme pornographic images]:
	[Amendment No. 15 not moved.]

Lord Hunt of Kings Heath: moved Amendment No. 16:
	Clause 65, page 52, line 8, leave out "depict" and insert "portray"
	On Question, amendment agreed to.
	Clause 77 [Data protection: additional offences]:

Baroness Miller of Chilthorne Domer: moved Amendment No. 17:
	Clause 77, page 58, line 34, leave out subsection (2) and insert—
	"(2) Section 63(5) of that Act ceases to have effect in relation to government departments other than the Crown Estate Commissioners."

Baroness Miller of Chilthorne Domer: My Lords, this is a small, consequential amendment to define the extent of the amendment that we won on Report on data protection. I beg to move.

Lord Hunt of Kings Heath: My Lords, for the reason suggested by the noble Baroness, the Government will not oppose the amendment. We will have to see what the other place thinks about it.

On Question, amendment agreed to.
	Clause 98 [Qualifying offenders]:

Lord West of Spithead: moved Amendment No. 18:
	Clause 98, page 76, line 29, leave out from "and" to end of line 30 and insert "either—
	(i) a custodial sentence of at least 12 months was imposed for the offence, or(ii) a hospital order was made in respect of it (with or without a restriction order),"

Lord West of Spithead: My Lords, the House will be well aware from the previous debates on this provision that interim violent offender orders are intended, and I believe are needed, to provide the public with immediate protection from an individual who is considered to pose a risk of serious violent harm while a decision on the main violent offender order is being taken.
	To address the concerns raised by the noble and learned Lord, Lord Lloyd of Berwick, I made a commitment on Report to bring forward amendments so that an interim order could be made only in the absence of the individual in respect of whom the order has been applied for, if the court is satisfied that the individual has been given reasonable notice of the application and the court hearing date. Such a requirement would ensure that the individual could attend the hearing or make representations on that day if he or she chose to do so. Amendment No. 20 fulfils that commitment.
	The other amendments in the group are minor, technical amendments, which seek to ensure that all individuals who are given a custodial sentence or hospital order on conviction for one or more of the specified qualifying offences are eligible for a violent offender order. The amendments also ensure that hospital orders, restriction orders and supervision orders made by the courts under all relevant legislation are included in the definition of these terms. I commend the amendments to the House. I beg to move.

On Question, amendment agreed to.

Lord Hunt of Kings Heath: moved Amendment No. 19:
	Clause 98, page 76, line 42, leave out from "and" to end of line 44 and insert "either—
	(i) a sentence of imprisonment or other detention for at least 12 months was imposed for the offence, or(ii) an order equivalent to that mentioned in subsection (3)(a) was made in respect of it,"
	On Question, amendment agreed to.

Lord Hunt of Kings Heath: moved Amendment No. 20:
	After Clause 103, insert the following new Clause—
	"Notice of applications
	(1) This section applies to—
	(a) any application under section 99 for a violent offender order,(b) any application under section 103 for an interim violent offender order, and(c) any application under section 102 for the variation, discharge or renewal of a violent offender order, or for the variation or discharge of an interim violent offender order.
	(2) A magistrates' court may not begin hearing such an application unless it is satisfied that the relevant person has been given notice of—
	(a) the application, and (b) the time and place of the hearing,a reasonable time before the hearing.
	(3) In this section "the relevant person" means—
	(a) the person to whom the application mentioned in subsection (1)(a) or (b) relates, or(b) the person in respect of whom the order mentioned in subsection (1)(c) has been made,as the case may be."
	On Question, amendment agreed to.
	Clause 115 [Interpretation of Part 7]:

Lord Hunt of Kings Heath: moved Amendments Nos. 21 to 25:
	Clause 115, page 87, leave out lines 41 to 43 and insert—
	"(a) a sentence of imprisonment, any other sentence or order mentioned in section 76(1) of the Powers of Criminal Courts (Sentencing) Act 2000 (c. 6) (as in force at any time after the passing of this Act) or any corresponding sentence or order imposed or made under any earlier enactment, or"
	Clause 115, page 88, leave out lines 3 and 4 and insert—
	""hospital order" means—
	(a) an order under section 37 of the Mental Health Act 1983 (c. 20) or section 60 of the Mental Health Act 1959 (c. 72), or(b) any other order providing for the admission of a person to hospital following a finding of the kind mentioned in section 98(2)(b) or (c) of this Act;"
	Clause 115, page 88, leave out lines 11 and 12 and insert—
	""restriction order" means an order under section 41 of the Mental Health Act 1983 (c. 20) or section 65 of the Mental Health Act 1959 (c. 72);"
	Clause 115, page 88, leave out lines 16 and 17 and insert—
	""supervision order" means—
	(a) a supervision order within the meaning of Schedule 1A to the Criminal Procedure (Insanity) Act 1964 (c. 84), or (b) a supervision and treatment order within the meaning of Schedule 2 to that Act;"
	Clause 115, page 88, line 33, at end insert—
	"( ) References in this Part to a finding of the kind mentioned in section 98(2)(b) or (c) or (4)(b) or (c) include references to a case where a decision on appeal is to the effect that there should have been such a finding in the proceedings concerned."
	On Question, amendments agreed to.
	Clause 117 [Offence of causing nuisance or disturbance on NHS premises]:

Lord Bassam of Brighton: moved Amendment No. 26:
	Clause 117, page 89, line 29, at end insert—
	""English NHS premises" means—
	(a) any hospital vested in, or managed by, a relevant English NHS body,(b) any building or other structure, or vehicle, associated with the hospital and situated on hospital grounds (whether or not vested in, or managed by, a relevant English NHS body), and(c) the hospital grounds,"

Lord Bassam of Brighton: My Lords, I can be brief. These amendments fulfil an undertaking that I gave to the noble Baroness, Lady Finlay, who I do not see in her place, on Report on 23 April.
	The amendments adapt the provisions in Clauses 117 to 119 so that the new offence of causing nuisance or disturbance to National Health Service staff on hospital premises, and the associated power of removal, will apply in Wales. The amendments provide for Welsh Ministers to issue the guidance under Clause 119 as regards the exercise of the powers of removal in Wales and to commence the provisions in so far as they apply to NHS premises in Wales. I hope that the amendments will meet with the approval of the noble Baroness and with that of the whole House. I beg to move.

Lord Thomas of Gresford: My Lords, I am grateful to the Minister for bringing forward these amendments. I am sure that I speak for the noble Baroness, Lady Finlay. I am pleased to have pointed out to the noble Lord that the Government had overlooked the fact that the Welsh Assembly could not make criminal offences. I am sure that the message will get to Wales in time for tomorrow that, at Third Reading, after the Bill had gone all the way through the other place and come here, they finally remembered that Wales exists.

Lord Elystan-Morgan: My Lords, Clause 117 is a very progressive and well justified measure. It is perfectly true, of course, that the more serious offences—we know that many such offences are committed on NHS premises and against NHS personnel—can be dealt with quite adequately under the Offences Against the Person Act 1861. The beauty of Clause 117 is that one can intervene at a much earlier stage to prevent what might be a very serious fracas developing. I welcome, as does the noble Lord, Lord Thomas of Gresford, the fact that this measure has now been extended to Wales.
	Whether this is NHS legislation that borders on the criminal, or criminal legislation that borders on the NHS is a somewhat moot jurisprudential point. It does not really matter. Massive executive responsibilities in relation to the NHS have been with Wales ever since the devolution process of 1964 began. They were devolved, after 1998, to make this matter the prerogative of the Welsh Assembly in relation to executive decisions. Now we have Part 3 of the Government of Wales Act 2006, in Schedule 5 of which NHS functions belong to an area where the Welsh Assembly could initiate a procedure that would enable an Order in Council to grant it a swathe of authority and jurisdiction. As yet, it has not done so. In a perfect world, I would love to have seen the Welsh Assembly take this initiative, provided of course that the provisions came into force no later than the provisions in this Act. There is no earthly reason why NHS personnel in Wales, vulnerable as they are, should not have the same protection as they have in every other part of the United Kingdom.
	I make a slightly technical, constitutional point here. During the passage of the 2006 measure through this House, an undertaking was given which, I think, was the equivalent of an undertaking given in the context of Scotland: that there would be a convention whereby this House, although of the parent Parliament, would have absolute sovereign authority to intervene in any matter relating to Scotland, Northern Ireland and Wales, but would not do so in regard to any function that either had been transferred or was intended to be transferred. Therefore, in future, I very much hope that the initiatives will come from the Welsh Assembly Government themselves. I think there are three matters in the pipeline now, one already having been passed by this House. Under Part 3, I understand there are about 20 more on the shopping list, and they take quite some time to be heard. I very much hope that the Welsh Assembly will, in so far as it is practicable, take those initiatives. I trust that this House will be loyal—I am certain that it will be—to that undertaking that it will intervene in such matters only at the request of the Welsh Assembly.

Baroness Finlay of Llandaff: My Lords, I would like to have on the record my sincere thanks to the Ministers in the Wales Office, to the First Minister in the Assembly and to Ministers in the Assembly for having entered into a long and, at times, complicated dialogue to ensure that we reach this point. These amendments, tabled by the Government, are extremely important because they ensure that the Assembly will have parity with the powers that will exist in England. They also have the sophistication to allow the powers to be triggered at the decision of the Ministers in the Assembly. I am also grateful to officials who, behind the scenes, have worked with me and enabled the dialogue to take place.

Lord Bassam of Brighton: My Lords, I thank noble Lords who have contributed to the debates and in particular the noble Baroness, Lady Finlay, because she has played a sterling role in this exercise. I also assure the noble Lord, Lord Thomas of Gresford, that no Labour Government could ever forget Wales—it is always at the forefront of our mind and our thinking.
	We responded very positively to suggestions put to us. Our earlier thinking was that the Welsh Assembly would come forward later with this, but we are more than happy to ensure that these provisions are active and will be actively pursued in England and Wales. I am also grateful to the noble Lord, Lord Elystan-Morgan, for his kind contribution. I thought that what he said was absolutely right: that these things are initiated close to where the power in Wales really lies. That is a very important principle, particularly in a devolutionary settlement. I am grateful for the support we have had on these amendments.

On Question, amendment agreed to.

Lord Bassam of Brighton: moved Amendments Nos. 27 to 31:
	Clause 117, page 89, line 32, leave out from "means" to end of line 38 and insert "English NHS premises or Welsh NHS premises,"
	Clause 117, page 89, line 40, after "body" insert ", or a relevant Welsh NHS body,"
	Clause 117, page 89, line 40, leave out "it" and insert "such a body"
	Clause 117, page 90, line 5, leave out "and" and insert—
	""relevant Welsh NHS body" means—
	(a) a National Health Service trust (see section 18 of the National Health Service (Wales) Act 2006 (c. 42)), all or most of whose hospitals, establishments and facilities are situated in Wales, or(b) a Local Health Board (see section 11 of that Act),"
	Clause 117, page 90, line 6, at end insert—
	""Welsh NHS premises" means—
	(a) any hospital vested in, or managed by, a relevant Welsh NHS body,(b) any building or other structure, or vehicle, associated with the hospital and situated on hospital grounds (whether or not vested in, or managed by, a relevant Welsh NHS body), and(c) the hospital grounds."
	On Question, amendments agreed to.
	Clause 118 [Power to remove person causing nuisance or disturbance]:

Lord Bassam of Brighton: moved Amendments Nos. 32 and 33:
	Clause 118, page 90, line 14, after "an" insert "appropriate"
	Clause 118, page 90, line 23, leave out subsection (5) and insert—
	"(5) In this section—
	"appropriate NHS staff member"—
	(a) in relation to English NHS premises, means an English NHS staff member, and(b) in relation to Welsh NHS premises, means a Welsh NHS staff member,
	"authorised officer"—
	(a) in relation to English NHS premises, means any English NHS staff member authorised by a relevant English NHS body to exercise the powers which are conferred by this section on an authorised officer in respect of English NHS premises, and(b) in relation to Welsh NHS premises, means any Welsh NHS staff member authorised by a relevant Welsh NHS body to exercise the powers which are conferred by this section on an authorised officer in respect of Welsh NHS premises,
	"English NHS staff member" means a person employed by a relevant English NHS body or otherwise working for it (whether as or on behalf of a contractor, as a volunteer or otherwise),
	"Welsh NHS staff member" means a person employed by a relevant Welsh NHS body or otherwise working for it (whether as or on behalf of a contractor, as a volunteer or otherwise).
	(6) Terms defined in section 117 have the same meaning in this section as in that section."
	On Question, amendments agreed to.
	Clause 119 [Guidance about the power to remove etc.]:

Lord Bassam of Brighton: moved Amendments Nos. 34 to 43:
	Clause 119, page 90, line 30, leave out "Secretary of State" and insert "appropriate national authority"
	Clause 119, page 90, line 31, leave out "English"
	Clause 119, page 90, line 34, leave out "English"
	Clause 119, page 90, line 36, after "of" insert "appropriate"
	Clause 119, page 90, line 38, leave out "NHS staff members" and insert "persons"
	Clause 119, page 91, line 10, leave out "Secretary of State" and insert "appropriate national authority"
	Clause 119, page 91, line 11, leave out "Secretary of State" and insert "authority"
	Clause 119, page 91, line 12, leave out "English"
	Clause 119, page 91, line 12, leave out from "must" to end of line 14 and insert ", when exercising functions under, or in connection with, section 118, have regard to any guidance published by the appropriate national authority under this section."
	Clause 119, page 91, line 15, leave out subsection (5) and insert—
	"(5) In this section—
	"appropriate national authority"—
	(a) in relation to a relevant English NHS body and authorised officers in respect of English NHS premises, means the Secretary of State, and(b) in relation to a relevant Welsh NHS body and authorised officers in respect of Welsh NHS premises, means the Welsh Ministers,
	"appropriate NHS staff member" and "authorised officer" have the same meaning as in section 118,
	"relevant NHS body" means a relevant English NHS body or a relevant Welsh NHS body.
	(6) Terms defined in section 117 have the same meaning in this section as in that section."
	On Question, amendments agreed to.
	Clause 120 [Nuisance or disturbance on HSS premises]:

Lord Bassam of Brighton: moved Amendment No. 44:
	Clause 120, page 91, line 21, after "England" insert "and Wales"
	On Question, amendment agreed to.
	Clause 129 ["Foreign criminal"]:

Lord Avebury: moved Amendment No. 45:
	Clause 129, page 98, line 1, leave out subsection (5) and insert—
	"(5) Conditions 1, 2 or 3 shall not be satisfied unless the Secretary of State certifies that the person constitutes a danger to the community."

Lord Avebury: My Lords, we come to the special immigration status which is dealt with in Part 10 of the Bill. If I may, I will first get it on the record that the amendments that were moved in Committee and on Report were not for the exclusive benefit of the Afghans but for everybody who is to be consigned indefinitely to the special immigration status defined in this part of the Bill. We were concentrating mainly on the Afghans because they were the people on whom we had detailed information. Of the other 38 people who are likely to be designated under the special immigration status, their cases were not in the public domain. The Minister raised the curtain briefly to allow us to glimpse the particular case of Mr A of the Justice and Equality Movement in Darfur who may, or may not, come under Article 1F. But neither he nor Mr B, a former member of the AWB in South Africa, had been tried. In the case of Mr A, the "serious reasons for believing" that he had done any of the specified acts in the exclusions appeared to rest on his standing in the JEM, which had committed war crimes in Darfur. It is an extension of Article 1F to say that it is going to apply to every single individual who is taking part in an organisation that has been labelled as having committed war crimes.
	My approach today is not to cross swords with the Minister on the interpretation of the convention of one Act in particular, but to try to see if we can reach an accommodation by looking at this status from a common-sense point of view. A person who is designated will be denied the right to work and access to mainstream benefits—to the end of his life in many cases, because the situation in his country of origin will make it impossible for him ever to be returned for ECHR reasons. That may continue not just for a few years but, as we see from looking at the examples—particularly for the Afghans—more or less into the indefinite future.
	These amendments say that in passing this indeterminate sentence, the Secretary of State will have to consider whether the person constitutes a danger to the community in this country. If not, he is able—as we have discussed already on two occasions—to grant six months' leave to remain. That can be renewed from time to time, until a final decision can be made. But after a number of years, when it becomes clear that there is no prospect whatever of returning the person, and even more that he has become settled in the UK with a wife and children who would also be exempted from designation by these amendments, it would be reasonable to grant him indefinite leave to remain.
	The Minister said that, in the case of the Afghans, although the wives were to be treated in line with the principal applicant, it was open to them to apply for asylum separately. As he knows, they have done so without getting responses for several years. Meanwhile, children have been born here and, in many cases, have acquired British citizenship. The longer the families are here, the closer their ties with the UK and the more intolerable it would be to pack them off to Afghanistan, or wherever, in the improbable event that circumstances there would make it possible for them to be returned without ECHR risk. I beg to move.

Lord West of Spithead: My Lords, I am grateful to the noble Lord, Lord Avebury, for bringing the House's attention back to the provisions relating to the special immigration status. The first of these amendments would introduce an additional condition which would have to be satisfied in order for someone to be treated as a foreign criminal for the purposes of Clause 128. In addition to being someone who has been sentenced to imprisonment for two years or more, or who has been given a custodial sentence of any length for one of the offences listed in the order made under Section 72 of the Nationality, Immigration and Asylum Act 2002, or who is excluded from refugee status by virtue of Article 1F of the Refugee Convention, a person would be a "foreign criminal", and hence liable to designation, only if, in addition, the Secretary of State certifies that he or she constitutes a danger to the community. I do not consider that additional restriction appropriate, and I am therefore unable to accept this amendment.
	Why? I remind noble Lords that the new special immigration status is intended to apply primarily to foreign criminals as defined in this clause who are liable to deportation, but who cannot currently be removed for human rights reasons. They are people who we would want to remove from the United Kingdom if we possibly could. We would seek to remove the person concerned whether or not he or she represented a continuing danger to the community. Special immigration status, as the phrase suggests, is an immigration measure. It is not about public protection.
	The test for deportation in Section 3(5)(a) of the 1971 Immigration Act is that the Secretary of State deems the person's deportation to be conducive to the public good. That test can be met on the basis of the person's past conduct alone, irrespective of whether or not they represent a continuing danger to the community.
	Let us take the hypothetical example of someone who has committed a serious offence and has served a lengthy custodial sentence well in excess of the two-year threshold. It may be that on their release they are no longer a danger to the community. Indeed, if the person concerned has been given a life sentence, the Parole Board will not recommend the person's release if they consider that he or she is still a danger to the community. We might nevertheless wish to deport that person, and, if we are unable to do so for human rights reasons, we would wish to be able to designate them under this part of the Bill. In the case of someone who is excluded from refugee status by virtue of Article 1F, the point may be even more starkly defined.
	Where a person is guilty of a crime against peace, a war crime or a crime against humanity, their ability to commit the crime is quite often linked to their status or position in the country where the crime occurred. Once they are in the United Kingdom, they will normally have lost that status or position, and, even if they have not, they are very unlikely to constitute a danger to the community of the United Kingdom. For example, Mr A—mentioned by the noble Lord—the founder member of the Sudanese Justice and Equality Movement whose case I mentioned on Report, posed no danger to the community of the United Kingdom. Again, it is likely that we would wish to deport such a person. If we are unable to do so for a human rights reason, we would want to be able to designate them under these provisions.
	The Government's position is that it should be possible to deny foreign criminals as defined by this clause immigration leave, and prevent them establishing ties which may make their removal at a later date, when things change, more difficult, whether or not they constitute a current danger to the community. Their past actions alone would be sufficient grounds for taking deportation action. However, since they cannot be deported at the present time, we say that the same test—that is, the individual's past actions, without any attempt to assess whether or not they continue to pose a danger to the community—should apply to designation for the purposes of special immigration status.
	I am aware that the provisions of Section 72 of the Nationality, Immigration and Asylum Act 2002 require there to be consideration of whether the person constitutes a danger to the community. While we have drawn on the provisions of that section to set the threshold for some of the conditions which may result in a person being designated under Part 10, the two are not an exact parallel. It is important to note that their position is very different from those who would be liable for designation for special immigration status.
	Section 72 applies for the purpose of the construction of Article 33(2) of the Refugee Convention, and it is Article 33(2) which requires this assessment to be made. The reason for that is that Article 33(2) permits signatory states to return a refugee to a country where he fears persecution. That is obviously a serious step to take, which is why Article 33(2) requires that the refugee must not only have been convicted of a particularly serious crime but must constitute a danger to the community in the country of refuge in order for removal to take place.
	In the case of special immigration status, we would not be removing an individual to face possible persecution. The status is designed for those who we accept can not be removed for human rights reasons and does not apply to recognised refugees. That is fundamentally different from the application of Article 33(2).
	I turn to Amendment No. 46 relating to the introduction of an appeal mechanism. I have technical concerns about the operation of the proposed appeal arrangements, which I will cover briefly before turning to issue of principle.
	First, any appeal against certification would be to the Asylum and Immigration Tribunal. There is no provision for an appeal to be transferred to the Special Immigration Appeals Commission, as might happen in the case of an appeal against an immigration decision.
	Secondly, as drafted, the amendment provides for an appeal against certification and for an appeal against a refusal to revoke the certificate. There would be nothing to prevent someone who had been designated appealing against certification, losing that appeal, and applying immediately for the certificate to be revoked with a further right of appeal if that is refused. If that appeal is also unsuccessful, there would be nothing to prevent a further application for the certificate to be revoked. Even though we have said that we expect the number of cases where the new power will be used to be small, the possibility of successive applications and appeals represents a potential waste of resources in terms of time, money and people.
	It has been the Government's position throughout the passage of the Bill that a free-standing right of appeal is unnecessary and that judicial review provides an appropriate vehicle for challenging any decision to designate. Under the provisions as currently drafted, once the Bill comes into force a person who has been designated will be able to bring a judicial review on the grounds that the decision to designate is unlawful, unreasonable, procedurally unfair or incompatible with their ECHR rights. In our view, this provides an adequate safeguard and is preferable to introducing a new appeal mechanism with multiple layers of litigation.
	My principal objection is not to the deficiencies of the proposed appeal mechanism. The Government have made their position clear: we believe it should be possible to designate people with the new status simply on the grounds of what they have done in the past, and that it is unhelpful and unnecessary to introduce the additional requirement to assess whether or not they currently represent a danger to the community. On that basis, I ask the noble Lord to withdraw his amendments.

Lord Avebury: My Lords, the Minister addressed the question of appeals as if Amendment No. 46 referred to appeals against designation whereas it is, of course, related to Amendment No. 45, which provides for certification. The appeal in Amendment No. 46 deals with the appeals on the Secretary of State's certification in Amendment No. 45. I hope that the Minister will recognise that his argument did not apply pari passu to what we are proposing under these two amendments.
	All that is not really the point because we are talking about whether there should be that procedure for certification in addition to any other conditions that are imposed. I must say that we have not been successful in trying to compromise, as I had hoped.
	The Minister did not address what I had said about families, particularly wives and children, who are left in a state of limbo indefinitely under the proposals in the Bill. The Minister knows that we have had reason to complain several times because his assurances that they had power to appeal, and that they would be considered in the normal way, have not been satisfied in practice. The four wives and children whose applications were treated in line with those of the Afghan hijackers—we are using them as examples and not as exclusive cases that we mean the decision to rest on—have not been considered properly as individual applicants but are still waiting after eight years for several cases to be considered.
	I am dissatisfied with the Minister's answer and, although I accept that the drafting is not perfect, I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 45) shall be agreed to?
	Their Lordships divided: Contents, 62; Not-Contents, 137.

Resolved in the negative, and amendment disagreed to accordingly.
	[Amendment No. 46 not moved.]
	Clause 136 [Amendment of section 127 of the Criminal Justice and Public Order Act 1994]:

Lord Hunt of Kings Heath: moved Amendment No. 47:
	Clause 136, page 102, line 4, leave out from "action"" to end of line 6 and insert "means—
	(a) the withholding of services as a prison officer; or(b) any action that would be likely to put at risk the safety of any person (whether a prisoner, a person working at or visiting a prison, a person working with prisoners or a member of the public).""

Lord Hunt of Kings Heath: My Lords, we come to what can best be described as the Earl Onslow amendment. The noble Earl has enlivened and instructed our proceedings on the Bill, and I am glad to be able to table this amendment. At rather a late hour on Report, we accepted in principle the amendment tabled by the noble Earl to alter the definition of industrial action in Clause 136. As, alas, the Government found some technical matters that were not to our taste, I undertook to bring forward a revised version for Third Reading.
	The noble Earl's amendment proposed changing the definition of industrial action from action that affects,
	"the normal working of a prison"
	to action that puts,
	"the safety of prisoners, staff or the public at risk".
	I want to confirm that safety considerations have always been the Government's primary concern and motivation behind these provisions, and that is why we welcomed the substance of the noble Earl's amendment. We have tabled the amendment as it its now drafted to resolve any uncertainties resulting from generic terms such as "staff", but in substance the amendment reflects the proposals of the noble Earl. It redefines industrial action as,
	"the withholding of services as a prison officer or ... any action that would be likely to put at risk the safety of any person".
	For the avoidance of doubt, the revised definition includes examples of categories of people likely to be put at risk. I commend the amendment to the House and beg to move.

The Earl of Onslow: My Lords, earlier in the debate I used the word "chinkette" of light. This is a great flash of sunlight from the noble Lord. One is always tempted on occasions such as this to refer to sinners that repenteth and all the rest of it. What I must do is say thank you to the noble Lord. What I am even more impressed by is that the amendment was moved on my behalf by my noble friend Lord Bridgeman on my Front Bench, without even putting forward the argument. He just said, "I beg to move", and the Minister was so moved by that one line that he agreed to it. All I can say is thank you very much indeed.

On Question, amendment agreed to.

Baroness Hanham: moved Amendment No. 48:
	After Clause 137, insert the following new Clause—
	"Police and prison service pay: Secretary of State's power to make regulations
	Regulations made by the Secretary of State—
	(a) specified in section 62 of the Police Act 1996 (c. 16) (functions of the board with respect to regulations) which do not follow the recommendations of the Police Negotiation Board as established by section 16 of that Act, or(b) under section 128 of the Criminal Justice and Public Order Act 1994 (c. 33) (pay and related conditions) which do not follow the recommendations of the Prison Service Pay Review Board as established by that section,
	may not be made until laid before, and approved by resolution of, the House of Commons."

Baroness Hanham: My Lords, this amendment, or something similar to it, was moved in Committee and it has changed only marginally since then in that we have been advised that we cannot include the Armed Forces in this Bill, even though they are in the same position as the Prison Service and the police. We have therefore excluded them from consideration at this time. However, the principle remains the same: where an independent review body makes a recommendation on pay for either the Prison Service or police, it should be a requirement that, if the Government are not going to accept those recommendations, they are obliged to bring the matter to Parliament.
	The three services—the Armed Forces, the Prison Service and the police—are all the subjects, or will be by the time this legislation goes through, of mandatory no-strike agreements. Therefore, there is an onus on the Government to ensure that their interests, which are held by the independent review bodies, are protected. The review bodies already have a clear remit as to what they have to take into account in coming to their decisions. That includes affordability, as defined by their funding departments. The Minister will recall that last year the Government staged the implementation of a pay review. This was the first time that they had not followed the review body's recommendations. We argue that the consequence of short-changing members of these vital services is very serious indeed. The actions last year resulted in the threatened prison officers' strike later this month, and the highly unusual police march on Parliament. The Government need to put themselves in a position of explaining their actions to Members of Parliament and having those actions approved by them by a formal resolution. I beg to move.

Baroness Harris of Richmond: My Lords, I will speak specifically about police pay and assure the noble Baroness that we will be supporting this amendment. Independent arbiters, as we have heard, awarded a 2.5 per cent pay award and the Home Secretary can have been left in no doubt about the anger of police officers on the day of their massively successful, well-ordered and well-mannered protest march on 23 January 2008. It was attended by 25,000 off-duty officers. We know that the Police Federation has gone to judicial review; we await the outcome of that.
	The office of constable is a protected one and has been for almost 100 years since police officers accepted a no-strike clause. How that office has been badly used by the Home Secretary's decision to override years of clear understanding on all sides that an agreement made by an independent body should be binding. It always was and it always should be. When I was a member of the Police Negotiating Board, some years ago in the time of the previous Government and this one, we all worked hard to maintain that position. It is desperately sad for me to see how this long-standing agreement has been completely overturned without any consultation and absolutely no real understanding of the views of front-line police officers who, day to day, give their services to protect us all.
	This is what a number of them have told me: they have expressed sheer disgust and outrage at the Home Secretary's decision not to award a full amount immediately. They mention the amount that MPs pay themselves; fat cats in the City, about whom we heard some lively questions put to the Minister today at Question Time; and the restrictions on their private life when they are off duty. Effectively, a police officer is always on duty. Officers do lots of horrible work. They are hands-on at accidents, deaths and assaults on themselves and others. They really do not feel that they are getting thanks for doing a difficult and sometimes dangerous job. In Committee, my noble friend Lord Thomas of Gresford said:
	"The appointment of a pay review body has been used over and again to take the sting out of an industrial conflict. It has very often been the price that the Government or a state body have paid for seeing an end to industrial conflict. They ought not in our view to undermine those provisions. That is why we support the amendment".—[Official Report, 10/3/08; col. 1367.]
	We continue to support that today.

The Earl of Onslow: My Lords, one cannot take away somebody's right to do something and then not put in place binding arbitration. My noble friend Lady Hanham mentioned the disturbing sight of the police demonstrating. That sight terrified me because it brings the forces of law into political play. That is very dangerous. One of the reasons for the 1688 glorious revolution was the fear of standing armies. That is the flipside of the coin when police or soldiery take political action. For that reason, above all, with the police, the Prison Service and the Army, the Government ought to accept binding arbitration. If they are not going to accept binding arbitration, they should explain to the House of Commons why they have not done so. To think otherwise is extremely dangerous.

Lord Mackenzie of Framwellgate: My Lords, I declare an interest as the former president of the Police Superintendents' Association and a recipient of police pay and a police pension. I have every sympathy with the amendment and agree entirely with the views of the noble Baroness, Lady Hanham, and the noble Baroness, Lady Harris. It gives me no pleasure to say this because I am a government Peer. Having said that, the amendment seems to be a matter for resolution in the House of Commons, not this House. For that reason alone, I shall abstain. I would have voted against the amendment. It is a financial matter and should properly be dealt with in the other place. I shall abstain on this basis, but I agree entirely that the Government have not taken the high ground on this. The right to strike was taken away, quite rightly, in 1919. The police are in a special position as are the other services. We should value that and honour independent arbitration. For that reason, I shall abstain.

Lord Dear: My Lords, in 1919 the Police Act of that year removed the right to strike from the police. One of the reasons for doing that was that the police had indeed gone on strike in various places, notably London and Liverpool, but in a number of other urban areas as well. This country was faced with the vision and reality of troops with fixed bayonets going onto the streets of Liverpool and a warship sailing up the Mersey and training its guns on the rioters on the shore in Liverpool. That is the sort of horror story that the 1919 Act sought to remove. We have moved very fast away from that to a position where the police serve this country loyally and steadfastly, despite the fact that their pay and allowances have oscillated over the years.
	In 1979 the Lord Edmund-Davies review, looking at the parlous state then of police pay and allowances, brought in for the first time the concept of a basket of occupations, as it was called in those days, against which police pay and allowances should be measured on an annual basis. From that time until very recently, police pay and allowances have been good and have been reflected in the way recruiting is carried out. I will set out what has happened quite recently. In 1979 there was the Lord Edmund-Davies review, with the basket of occupations. That basket of occupations was changed arbitrarily by the Government in, I think, 2006, changing the occupational constitution of that basket to something which, quite clearly, would produce a lower pay review. That review, on the most recent sounding, produced a 2.8 per cent increase. That was not good enough for the Government, who went to arbitration. Both sides signed up to binding arbitration and the arbitration level, if I remember rightly, was 2.5 per cent. The Government settled at 1.9 per cent. We are really slicing this; the principle is not about the amounts involved, which were quite small. They would have been nice to have, but it was not that much of an issue. The issue was the fact that the principle, which has already been spoken about very eloquently in your Lordships' House, had been breached.
	The Government's action on this last occasion drove a coach and four straight through all those principles of trust, respect and support, which a uniformed service has had and needs to have in the Government of this country. The police feel deeply let down and believe that they have been thrown to one side. I am sorry to give marginal percentage points, but the 1.9 per cent sits very uncomfortably with the 2.5 per cent that was given to police support staff. So, in this philosophical way, you have police officers walking on the streets with civilian police support officers who are getting more money because they have the right to strike. The principle speaks for itself. I warmly and wholeheartedly support the amendment.

Lord Hunt of Kings Heath: My Lords, first, perhaps I may say how I much welcome the cameo appearance of the noble Baroness, Lady Hanham, on this Bill. Clearly, I welcome the opportunity to debate this matter again, which we last debated in Committee. I also pay tribute to the outstanding work of the police, the prison officers and the Armed Forces, although for the reasons stated by the noble Baroness her amendment is limited to police and prison officers, and does not refer to the Armed Forces.
	Yes, these very key workers deserve a fair and effective pay system mechanism, which serves them and the taxpayer well. That is very simply the Government's position. Although the focus of the amendment and the debate is on the police and prison officers, they are not alone in having independent pay machinery which makes recommendations to Ministers. I emphasise the words, "recommendations to Ministers". This process has been developed over more than 35 years and has for a number of workforces, including groups without the right to take industrial action, stood the test of time and has been seen to deliver a fair and effective mechanism for determining pay awards.
	However, it has always been clear that the Government retain discretion on whether to implement those recommendations. Both this Government and previous Governments have overseen such a system. Looking at the record, for instance, of the previous Government in relation to awards by independent pay review bodies, it is clear that they have used staging many times. I see in your Lordships' House at least two former distinguished Secretaries of State for Health. The doctors and dentists pay review body pay awards were staged four times—in 1984, 1990, 1991 and 1996. The pay award was deferred twice—in 1985 and 1986. In 1993, a pay limit was imposed. For nurses, the pay award was staged in 1985, 1990 and 1991.

The Earl of Onslow: My Lords, those people all have the right to industrial action. That is the difference. It is as simple and as clear as that. I am delighted when the present Government use the Conservative Government to pray in aid for their errors. On occasions, my Government made just as many errors as the present one. There is no need to pray in aid their errors.

Lord Hunt of Kings Heath: My Lords, I do not know whether I am praying in aid their errors or not. I am just pointing out that I find it a little puzzling that the Conservative Front Bench is moving this amendment. I fear that it is rather playing politics in this area.

Noble Lords: Oh!

Lord Hunt of Kings Heath: My Lords, I very much fear that. I would caution that party against it. Of course, the noble Earl is right that some of the pay groups I have mentioned are not subject to restrictions on taking industrial action. That is one distinction. But, none the less, I seek to demonstrate that the party opposite has not been reluctant to stage pay awards in the light of recommendations made by independent review bodies. The fact is that the noble Earl might have given me just one or two more seconds to list the times that pay awards were staged in relation to the Armed Forces Pay Review Body—in 1984, 1990, 1994 and 1996. The previous Government deferred an Armed Forces Pay Review Body recommendation once and in 1993 a pay limit was imposed. I could go on.

Lord Thomas of Gresford: My Lords, can the Minister add to the list any occasion when the Conservatives—I am not speaking for them—ignored the binding award of an arbitration?

Lord Hunt of Kings Heath: My Lords, I cannot. Perhaps the noble Lord could explain his point.

Lord Thomas of Gresford: My Lords, we were told by the noble Lord, Lord Dear, that this was a binding arbitration and that there was an award of 2.5 per cent, but that the Government were prepared to pay only 1.9 per cent. Was there ever a situation when the Conservative Government failed to abide by a binding arbitration?

Lord Hunt of Kings Heath: My Lords, I think that it is for them to answer that particular point. I am simply seeking to demonstrate to your Lordships' House that Governments of different complexions have found it necessary sometimes to stage awards where wider considerations have come into force. That is what has happened. This does not undermine the integrity of the process of independent review bodies in the least. But, ultimately, the Government have to make those decisions.
	Obviously we have considered the amendment and the impact that it would have. Our conclusion is that the Government have an established responsibility for managing public finances. We do not think that it is appropriate to subject to parliamentary approval the Government's discretion to regulate an important factor in those finances. Parliament already has the overriding oversight of departmental expenditure, which we think gets the balance right. But, at the end of the day, the Government must reserve the discretion to make the final decision, which is why we cannot support the noble Baroness's amendment.

Baroness Hanham: My Lords, I cannot say that I am totally surprised at the Minister's response. I am equally not totally surprised at the fact that he has tried to invoke the Government of some 10 years ago. We have had quite a lot of this Government and, probably, we can rely now on their history on legislation. I have nothing more to say on this amendment.

Lord Hunt of Kings Heath: My Lords, inspiration has reached me in response to the interesting intervention made by the noble Lord, Lord Thomas. I am reliably informed that in 1990 the then Home Secretary decided not to accept certain aspects of a recommendation of the Police Arbitration Tribunal.

Baroness Hanham: My Lords, as I was saying before the Minister made that point, it is under this Government that this legislation is being put into place and it is their actions with which we are dealing today. These two bodies cannot strike. There is a review body, which always has access to information before it makes its recommendations. If the Government seek to change that, as the Minister says, they have discretion. In the light of what they have done, we say that that discretion is too great. Therefore, it should be controlled and made responsible to Parliament. I do not accept the Minister's reply and I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 48) shall be agreed to?
	Their Lordships divided: Contents, 197; Not-Contents, 116.

Resolved in the affirmative, and amendment agreed to accordingly.
	Clause 144 [Orders, rules and regulations]:

Lord Hunt of Kings Heath: moved Amendment No. 49:
	Clause 144, page 110, line 3, at end insert—
	"(5A) An order under section 150(4A)(b) is to be made by statutory instrument."
	On Question, amendment agreed to.
	Clause 145 [Consequential etc. amendments and transitional and saving provision]:

Lord Hunt of Kings Heath: moved Amendment No. 50:
	Clause 145, page 110, line 36, at end insert—
	"(8) Her Majesty may by Order in Council extend any provision made by virtue of subsection (4)(b), with such modifications as may appear to Her Majesty to be appropriate, to the Isle of Man or any British overseas territory.
	(9) The power under subsection (8) includes power to make supplementary, incidental, consequential, transitory, transitional or saving provision.
	(10) Subsection (8) does not apply in relation to amendments of the Armed Forces Act 2006 (c. 52)."

Lord Hunt of Kings Heath: My Lords, these are technical amendments which ensure that any consequential amendments that need to be made to other enactments can be extended to the Isle of Man and British Overseas Territories in appropriate cases. I beg to move.

On Question, amendment agreed to.
	Clause 149 [Extent]:

Lord Hunt of Kings Heath: moved Amendment No. 51:
	Clause 149, page 112, line 18, after "by" insert "or under"
	On Question, amendment agreed to.
	Clause 150 [Commencement]:

Lord Hunt of Kings Heath: moved Amendment No. 52:
	Clause 150, page 113, line 15, at end insert—
	"(4A) Sections 117 to 119 come into force—
	(a) in relation to English NHS premises, on such day as the Secretary of State may by order appoint, and(b) in relation to Welsh NHS premises, on such day as the Welsh Ministers may by order appoint."
	On Question, amendment agreed to.
	Schedule 5 [Offences specified for the purposes of sections 225(3A) and 227(2A) of the Criminal Justice Act 2003]:

Lord Bach: moved Amendment No. 53:
	Schedule 5, page 188, line 16, leave out "1981" and insert "2004"

Lord Bach: My Lords, this is a minor drafting amendment to Schedule 5 to the Bill which inserts new Schedule 15A to the Criminal Justice Act 2003. Paragraph 42 of new Schedule 15A to the Criminal Justice Act 2003 refers to the Firearms (Northern Ireland) Order 1981. The reference should be to the 2004 order, and the amendment makes this correction. I beg to move.

On Question, amendment agreed to.
	Schedule 25 [Amendments to armed forces legislation]:

Lord Hunt of Kings Heath: moved Amendment No. 54:
	Schedule 25, page 271, leave out lines 17 to 35 and insert—
	"Power to dismiss certain appeals following references by the CCRC
	2 After section 25B insert—
	"Appeals following references by the CCRC
	25C Power to dismiss certain appeals following references by the CCRC
	(1) This section applies where there is an appeal under this Part following a reference by the Criminal Cases Review Commission under section 12A(1)(a), (7) or (8) of the Criminal Appeal Act 1995.
	(2) Notwithstanding anything in section 12, 21 or 25 of this Act, the Appeal Court may dismiss the appeal if—
	(a) the only ground for allowing it would be that there has been a development in the law since the date of the conviction or finding that is the subject of the appeal, and(b) the condition in subsection (3) is met.
	(3) The condition in this subsection is that if—
	(a) the reference had not been made, but(b) the appellant had made (and had been entitled to make) an application for an extension of time within which to seek leave to appeal on the ground of the development in the law,the Court would not think it appropriate to grant the application by exercising the power conferred by section 9(3).""
	On Question, amendment agreed to.
	Schedule 27 [Transitory, transitional and saving provisions]:

Lord Hunt of Kings Heath: moved Amendments Nos. 55 and 56:
	Schedule 27, page 304, line 4, leave out paragraph 14 and insert—
	"14 The amendment made by section 41 applies in relation to an appeal under Part 1 of the Criminal Appeal Act 1968 (c. 19) if the reference by the Criminal Cases Review Commission is made on or after the date on which that section comes into force."
	Schedule 27, page 304, line 23, leave out paragraph 15 and insert—
	"15 The amendment made by section 42 applies in relation to an appeal under Part 1 of the Criminal Appeal (Northern Ireland) Act 1980 (c. 47) if the reference by the Criminal Cases Review Commission is made on or after the date on which that section comes into force."
	On Question, amendments agreed to.

Lord Hunt of Kings Heath: My Lords, I beg to move that this Bill do now pass.
	Moved accordingly, and, on Question, Bill passed, and returned to the Commons with amendments.

National Insurance Contributions Bill

Lord McKenzie of Luton: My Lords, I beg to move that this Bill be now read a second time. The Bill has two purposes. First, it allows us to deliver the NICs aspects of the personal tax package announced during Budget 2007. By allowing the upper earnings limit to be aligned with the point at which higher rate tax starts to be paid, the Bill will allow regulations to simplify the UK's tax and NICs system significantly. From April 2009, there will be just two main rates of income tax, and they will apply to the same bands of earnings as the two rates of NICs, creating one of the simplest personal tax structures of any developed country.
	Secondly, these proposals maintain the settlement achieved in the Pensions Act 2007 which are central to the Government's commitment to provide a solid and simpler state pension. By bringing forward the introduction of the upper accrual point, the Bill maintains the timetable for the removal of earnings-related state second pension to that recommended by the Pensions Commission. That will mean that by around 2030, the very complex earnings-related structure of the state second pension will be withdrawn, leaving behind a wholly flat rate scheme that will be simple to administer and simple for contributors and pensioners to understand.
	I would like to explain each of those purposes in more detail, starting with the changes to the upper earnings limit. This is part of a package of reforms to the personal tax system announced at Budget 2007. That package is not for parliamentary debate today, as the majority of the changes are being legislated for in this year's Finance Bill. Noble Lords will be aware of the broad thrust of the package and of the proposal for further measures following debate around the withdrawal of the 10 per cent income tax band. However, I remind the House that the reforms will take 600,000 more pensioners out of income tax, and 200,000 more children out of poverty.
	A central part of the package is to align the national insurance upper earnings limit—the point at which Class I NICs become payable at 1 per cent rather than 11 per cent—with the level at which higher rate income tax becomes payable. The same will happen to the upper profits limit, which is the equivalent point for the self-employed—the point at which NICs become payable at 1 per cent rather than 8 per cent.
	As announced, moving both limits will be a two-stage process. In this tax year, the upper earnings limit—the UEL—will be increased to £770 per week. In 2009-10, it will increase again to be aligned with the level at which higher rate income tax becomes payable. It is the second stage of that increase which requires the change to primary legislation under the Bill. At present, the maximum level of the UEL is restricted to seven and a half times the primary threshold, the point at which NICs start to be paid. To align the two systems from 2009-10, that link needs to be removed, which is what the Bill makes possible.
	I am sure that the House will want to know that there will be effective parliamentary scrutiny of the level of the UEL once the restriction of it being no more than seven and a half times the primary threshold is removed. The setting of the UEL is currently subject to the negative resolution procedure. However, I am pleased to be able to tell the House that the annual regulations for setting the level of the upper earnings limit will now be subject to affirmative resolution procedures, so that for the first time noble Lords and Members of the other place will have the chance to debate any changes. This approach is consistent with the way in which changes to upper profits limit and lower profits limit for class 4 National Insurance contributions paid by the self-employed are made. They, too, are able to be set without restriction, but are subject to the affirmative procedures. It will also be consistent with the setting of the lower earning limit once it is no longer linked to the level of basic state pension when that becomes earnings linked. The Delegated Powers Committee, which examined the Bill and the powers it contains, did not make any comment. Therefore, I feel sure that these clauses guarantee a fair compromise between allowing detailed legislative scrutiny without imposing excessive burdens.
	The Bill's second purpose is to maintain the policy position on S2P that was settled in the Pensions Act 2007. S2P grew out of SERPS but with significantly improved coverage for lower-paid workers and people with parenting or caring responsibilities, typically women. Currently around 2.1 million carers, over 90 per cent of them women, and about 6.1 million low earners, almost 60 per cent of them women, are accruing entitlement to S2P. As a result of reform, around 1 million more people will accrue S2P from 2010, and approximately 90 per cent of them will be women.
	The Pensions Act 2007 reformed S2P. It greatly simplified the first element of the pension which was designed with particular emphasis on the low paid and carers. It also made provision gradually to withdraw the second element of S2P, the earnings-related component. It may be helpful to recap briefly the background to that policy development, and to do so I need to take you back to November 2005 and the second report of the Pensions Commission. The commission analysed the advantages and disadvantages of a single-tier state system, folding basic state pension and S2P pension in together, but found that the transition between now and a simple single-tier pension was too complex and that buying out that complexity was unaffordable.
	Instead the commission reasoned for an earnings-uprated basic state pension supported by a second-tier state pension and looked at three options for that second tier. The first option was that new accruals to S2P would cease immediately with an earnings-related national auto-enrolment scheme taking its place. The second option was to carry on as now under the current structure of S2P where the earnings-related element will be gradually eliminated by the mid-2050s. The commission's third option was to accelerate elimination but still maintain some earnings-related compulsion for a transition period.
	The commission recommended the third option as the best way forward, and in our Green Paper of May 2006 we accepted the commission's recommendation on the withdrawal of earnings-relation. Our reasoning, drawn from the commission's, was that a simpler flat rate S2P, combined with an earnings-uprated basic state pension, will provide the solid foundation that will give people the confidence to save in personal accounts. It also avoided a sudden reduction in the contracted-out rebate and with it a reduction of support for defined benefit schemes that an immediate end to earnings-relations might cause.
	The Pensions Act 2007 introduced a device for withdrawal: we would freeze the upper point for accruals in S2P. This new upper accrual point would be set at a time and a rate which would mean that earnings-related accruals within S2P would cease around 2030, keeping to the commission's proposed timetable. The upper accrual point replaces the upper earnings limit in both S2P and rebate calculations and was planned for introduction from 6 April 2012 at the earliest. However, the upper accrual point now needs to be introduced earlier in order to ensure that our S2P reforms can be delivered as intended with a fully flat-rated S2P from around 2030.
	The Bill therefore implements the Chancellor's announcement in the Pre-Budget Report in October 2007 that the introduction of the upper accrual point would be brought forward to 6 April 2009. The need for this change results from the above-inflation increases in the upper earnings limit which we have just been discussing. If introduction of the upper accrual point is not brought forward, there would be knock-on effects to the pensions reforms introduced in last year's Pensions Act. These knock-on effects would include delays to the timetable for delivering a flat-rate state second pension because, if left to 2012, the upper accrual point would have been introduced at a higher point than was originally expected. The above-inflation increase in the upper earnings limit would also have meant higher earners potentially making small but nevertheless unintended gains in their pensions over and above the pension White Paper reforms because S2P accrues on the portion of earnings between the lower and upper earnings limit, a band which will become wider.
	A further effect would have been a larger than expected increase in the band of earnings on which contracted-out rebates are paid. This is because the rebate reflects the S2P forgone and is, again, paid on earnings between the lower and upper earnings limit. The group that would have benefited from this increase in the rebates would have been higher earners accruing higher pension entitlements than intended under the pension reforms. By introducing the upper accrual point in 2009 rather than 2012, the Bill prevents most of these anomalous gains as well as returning the timetable for the removal of earnings-related state second pension to that recommended by the Pensions Commission. While the proposal to introduce the upper accrual point in 2009 will affect some high earners, S2P accrual and rebates for this group are still expected to be higher than those envisaged in the pension White Paper reforms. They will still see significant gains from our overall package of reforms on state pensions. In future, someone earning at the level of the UEL today will be gaining around £45 a week in state pension. Those are the outcomes we promised under the White Paper and those are the outcomes we will still deliver.
	This new point, the upper accrual point, will be introduced at the level of the upper earnings limit for 2008-09, which is £770 per week. From April 2009, the upper accrual point will replace the upper earnings limit as the threshold for the calculation of both S2P and contracted-out rebates. It is proposed that it will be frozen in cash terms at its introductory level, while the lower earnings limit and lower earning threshold will continue to increase annually, as now, in line with prices and earnings respectively. The combination of all three thresholds will mean that the band of earnings on which the current earnings-related state second pension and contracted-out rebates are based will reduce year on year. As a result, future accruals of S2P will be wholly flat-rated with no earnings-related element.
	This change will mean that from 6 April 2009 all employers will need to calculate, record and report additional information for employees with earnings above the upper accrual point. Although this will require changes to their payroll records, the information is essential for both S2P purposes and the calculation of contracted-out rebates and was something that was already on the horizon with the intended introduction of the upper accrual point in 2012.
	In conclusion, this is both an important and a necessary Bill. It helps us to implement a personal tax package that increases simplicity while reducing child poverty and removing many pensioners out of income tax. It also allows us to return to the timetable for the introduction of a simple flat-rated state second pension scheme. I commend the Bill to the House.
	Moved, That the Bill be now read a second time.—(Lord McKenzie of Luton.)

Baroness Hollis of Heigham: My Lords, I am sure that I speak for the whole House in thanking my noble friend the Minister for such a clear explanation of the Bill. It is narrowly drawn, but it has wide-ranging implications, or so I shall seek to suggest. I shall not go into the flattening of S2P—I understand the logic of that and think it is sensible. Instead I shall raise two issues. The first is some issues concerning the alignment of NICs and tax bands. The second, which will not surprise my noble friend, is the issue of buy-back.
	NICs and tax thresholds have always been curiously connected. It was not until 1975 that we constructed LELs and UELs, as we currently understand them, as a self-enclosed system with a crude ratio in which LELs were about a quarter of average earnings and UELs at about one and a half of average earnings. In 1985, the then Government removed UEL for employers but not—although it is often suggested by those to the left of me, and perhaps even by those to the right of me—for employees as well. A few years back, the Government also separated the LEL from the tax threshold. I cannot find out when, but it may have been when we introduced tax credits to replace family credit. I am not sure about that. We now have a primary tax threshold that is £10 or so higher than LEL, which itself is now quite arbitrarily attached to the level of the basic state pension, which is a benefit. Finally, in a move which separates the national insurance upper limits from benefits, we are reconnecting UEL to the upper tax threshold. So we now have alignment of the tax and benefit system at the top but some rather curious connections at the bottom, where LEL runs. It is those connections that I want to explore now, particularly as they very much interact with those who are also experiencing the loss of the 10p tax band.
	It is even more complicated than that. At the bottom, we have a tax credit threshold at 16 hours' work, which gives you tax credits. It is different from the LEL because you can run several small jobs together to qualify, but if you do get tax credits, that passports you through to national insurance, notwithstanding your being below the LEL on all other grounds. LEL is still for some arbitrary reason attached to the basic state pension and gives entitlement to contributory benefits. The question I want to ask my noble friend—as I gave the department notice of it yesterday, I am confident he will have an answer to it—is whether this LEL will rise with earnings from 2012 as will pensions, rather than with RPI as at present. At the bottom is the primary threshold, PT, at which point you pay tax.
	If the LEL rises with earnings, because it is attached to the basic state pension which will rise with earnings, the gap between it and the primary tax threshold, which I presume will be largely RPI'd, will narrow over time: LEL will rise faster than the primary threshold. Equally, if average earnings rise faster than the minimum wage, an increasing number of people will fall below the LEL, though working 16 hours a week at minimum wage, and lose entitlement to contributory benefits.
	In discussion on the Bill in the Commons, everybody fretted about what was happening at the top; nobody looked at what was happening at the bottom. I am sure that my noble friend can allay my fears. However, if LEL rises with basic state pensions and its earnings links, what are the implications for those, especially women whose earnings are rising less fast, who are on the minimum wage or who work part time? Will they become progressively disfranchised from contributory benefits? If the primary threshold remains RPI'd, does it mean that LEL and primary threshold will, as with the UEL, again become realigned over time, reconnecting the lower earnings limit with the tax threshold, both at bottom and at top?
	It is clear that the higher that the LEL rises, the more people, such as partnered women in part-time jobs and disabled people in part-time work, are potentially excluded from contributory benefits. The simple answer would be to break the link with the basic state pension level and allow LEL to remain below that at which the BSP rises, because people would otherwise drop out of the contributory system. My noble friend may be able to give me other reassurances about the distributional effects. Real issues surrounding who will be eligible for a contributory system will arise if we do not think ahead about what is going to happen to LEL if it continues to be connected to a BSP that will be earnings-linked rather than RPI-linked.
	My second point is that those who are currently disconnected from contributory benefits, especially for BSP, have an incomplete national insurance record. I rather doubt that my noble friend can give me the reassuring reply that I would like also on this.
	Those who are savvy or well-heeled, or who have parents or husbands with the same fortunate attributes, can buy back their missing national insurance contributions as they go along, back to a further six years. But poorer women may well have missing years long before their previous six years. They may have had children before 1978; they may have dovetailed together several part-time jobs—if they are not eligible for tax credit, they do not get into the NI system; they may be service wives accompanying husbands abroad; or they may have extended caring responsibilities for older people. As a result, they would have a shortfall on their record which they could not cover under existing rules, meaning that only a quarter of women, compared with 90 per cent of men, currently retire with a full BSP. The Government's figures are higher only because widows inherit a full BSP from a contributory husband. Therefore, the relevant statistics are about not when they retire but what they currently enjoy on average during their retirement.
	The situation of those pensioners will improve from 2010, and dramatically so from 2020, thanks to the Government's Pensions Bills, but in the mean time there will be a sandwich generation which as it retires is dependent on the support of partners or the state to fund their retirement even though they would like to help themselves by co-purchasing missing years back beyond the six-year rule. We are talking about women who, as we have argued previously in this House, keep several generations afloat: their own older children, their grandchildren, their partner or husband and often elderly parents as well. By supporting others they will often have lost the chance to support themselves, at least with a pension of their own.
	We debated this matter very fully last summer. I am considering tabling similar amendments to this Bill to allow buy-back beyond six years by amending the 1992 social security Act. I hope that if I do so the House will be minded to support me as fully and extensively as it did last summer when the Government faced their biggest defeat since 1997. I am sure the House would forgive me if the amendment introduced delays to the passing of the Bill.
	If I propose such a measure, I hope that my noble friend will not tell me on behalf of Her Majesty's Treasury that it cannot be afforded. The cost of such an amendment, with sensible hurdles in place, would run on average at about £25 million a year, declining sharply after 2030. The current Exchequer contribution to class 3 buy-back contributions is of the order of £450 million for the last year for which I have figures. Each and every year it fluctuates by more than the cost of this would-be amendment. That fluctuation in contribution, and its scale, seems to bother nobody one bit. We cannot suddenly start to worry about the cost only when it comes to helping poorer women help themselves.
	As those missing years are bought by all and sundry, including by Ministers and ex-Ministers, I hope we will not be told that it is poorly targeted. We do not know. I have asked and been told that the Government do not collect information about who currently receives this benefit by way of class 3 contributions. I suspect that it is poorly targeted. If we do not ask the questions, we cannot be seriously worried about the issue. Therefore, suddenly to put it on the back of some poorer women is inappropriate.
	The third argument that has been run is that of risk: if poorer women knew that at the end of their working lives they could buy back missing years they would not do it during the course of their working lives. This is to presume a rationality which is sadly missing from the lives of women who possibly in many cases do not even understand the reduced married women's stamp. In any case, we are dealing with a transitional generation, those who from about 2105 to 2020 will certainly enjoy the benefits of the Pensions Act and the reduced number of contributions they will need to make—only 30 years. Therefore, those women who are now 50 to 60 cannot revisit their past behaviour and change it in perverse ways that my noble friend or HM Treasury might think unacceptable. That behaviour is already there; we need to be able to help them to help themselves.
	Finally, relevant to affordability—I have a couple of remarks on this—is the state of the National Insurance Fund, which can only be used for contributory benefits, apart from the NHS supplementation. Obviously that fund does not sit there as a piggy bank; it allows for reduction of the borrowing requirement which in turn is a form of not-so-hidden subsidy to other services. The guidelines from GAD are for a 16.7 per cent balance, which I calculate as about £12 billion on current levels of contributory benefit expenditure. The balances are growing fast; the figure now—for the current year, I think—is forecast at £42 billion, as opposed to £12 billion. That is equivalent to 65 per cent of benefit expenditure, rather than 16.7 per cent. The balances are also growing each and every year—by £5 billion, then £6 billion and £7 billion—because more people are earning and paying higher contributions, while fewer people are drawing out.
	I repeat; there is a £5 billion addition, rising to £6 billion and £7 billion, yet we cannot have £20 million from a fund devoted to contributory benefits. Of course, given the demographics and the earnings link to BSP, these surpluses will begin to flatten from 2012 on, but while employment remains high—and with the raising of the state pension age, which also puts into the Exchequer a contribution equivalent to about £5 billion a year, but is excluded from nearly all discussion—that flattening will take some time to occur. I suspect we will be well into the 2020s, depending on unemployment figures, before we even begin to come back near GAD's recommended figures. By that time, the cost of these buy-back proposals will have dwindled to the stuff of margins of error.
	I am confident that if the National Insurance Fund were in deficit and required a taxpayers' contribution, we would be told quite sharply that there was no money available for increases in certain benefits. If my noble friend will forgive me, I will tease him that such arguments, interestingly, only ever seem to run in one direction.
	I am entirely content with the clauses in this Bill as it stands, but it is about reading the silences—the things not said. I am hoping that the House will continue to investigate and explore my particular concern about the connections between the tax threshold at the lower earnings level and buy-back on the other in further stages of this Bill.

Lord Newby: My Lords, the fact that we are debating this Bill in detail at all reflects a curiosity of parliamentary procedure. In the minds of voters, this Bill relates to tax; that is how national insurance is perceived. From a parliamentary perspective, it relates to contributions to that extraordinary and almost mythical creature, the National Insurance Fund—about which almost everyone is completely ignorant. However, it does, and therefore we have the joys of debating it at length in your Lordships' House.
	As the Minister explained, the Bill contains but two principal proposals. When the Bill was debated in another place, Ministers explained that the first, the increase in the upper earnings limit for national insurance, was part of a carefully balanced package. He repeated that principle this evening; however, unfortunately for the balance, another component of the package was the abolition of the 10p tax rate. That, of course, is now being reversed. It would be cruel to ask the Minister to explain current government thinking on how it is to be reversed, and therefore I will not, but any discussion of these measures in the context of a balance is now completely redundant.
	The other argument used, and used again this evening, was that this is a simplification measure. It is, and we welcome it as such. We are in favour of tax simplifications, but both we and the Government like a tax simplification that also, as it happens, brings in an additional £1.5 billion in revenue. We should have more of those. Our complaint here is simply that the Government should be clearer that one consequence of this measure is to raise that amount of money. I do not think I heard the Minister explain in any detail in his introductory speech that main consequence of this measure—and it is, arguably, one main reason behind it. Given the way in which the Government are perceived, if they are raising £1.5 billion—a quite significant sum—they ought to come clean about that and not pretend by hiding behind the fact that this is a simplification measure.
	There have also been rather exaggerated claims in another place by the Government about the benefit that this additional revenue will bring, not least on child poverty. In their wilder moments, Ministers in another place almost seemed to suggest that child poverty and many other social ills were to be solved, virtually at a stroke, by this relatively modest amount. Getting to the bottom of how the money will actually be spent would, I suspect, be a fruitless exercise. However, the Institute of Chartered Accountants in England and Wales has come up with a relatively modest and sensible suggestion; namely, to ask the Government to publish their projections of how much of the extra revenue raised will be allocated to the National Insurance Fund and the NHS. Could the Minister express a view on whether the Government would be minded to accede to such a request?
	The second proposal in the Bill is to introduce the upper accrual point in relation to state second pensions. Unlike the Minister and the noble Baroness, Lady Hollis, I am a mere toiler in the vineyard of Treasury matters and have never graduated to a detailed understanding of pension legislation. I suspect that even though we have a Committee yet to come on this Bill, I will not qualify even at the end of our deliberations.
	In general terms, however, as the Minister knows, these Benches have been extremely critical of the Government's priorities on pensioners—in particular, on pensioner poverty. We have been critical of pension credits, not least because 40 per cent of eligible pensioners do not claim them, and have argued the case both for a speedier reintroduction of the link between state pensions and earnings, and a move toward a citizen's pension—particularly as a means of moving to deal with the scandal of women who receive little or nothing by way of a state pension.
	I do not intend to repeat to your Lordships this evening all of the arguments in favour of those policies. However, what happens to the extra revenue that is raised under this proposal? I believe that it is likely to be up to £450 million a year. In debates in another place, Ministers said that that sum was accounted for in the 2007 Red Book. I have looked at that, and while the figure may be included in one of the broader totals, I was not able to see it identified anywhere separately. I accept that that may be a result of my slipshod reading of the Red Book, but I would welcome some clarification from the Minister on how that additional revenue is accounted for in that statement; to a casual or even semi-qualified observer, it is very unclear at present.
	Much of the debate on this Bill in another place related not to these principal changes, however, but to one consequence of them and one issue of parliamentary principle. The consequential change is the abolition of the ratio, of 7.5 times, between the upper and lower earning limits. That ratio is long-standing, and the noble Baroness explained how it was established in the first place. It has been seen as a check on any Government's ability to raise that limit without primary legislation and proper parliamentary scrutiny. The parliamentary principle, linked to that point, is that national insurance thresholds and limits can, of course, be changed by order despite the fact that the change in limit can have substantial consequences on revenue. The Minister explained that in future any changes to the upper limit will have to be by affirmative resolution in a statutory instrument. As we have debated many times in your Lordships' House, this is very different from the level of parliamentary scrutiny that applies on measures that come in via primary legislation. I have considerable sympathy with the concerns expressed in another place on this issue.
	There is probably a consensus among the parties that once the change to align the two limits—the upper NI limit and the threshold for higher rate national tax—has been brought about, they should remain aligned, and that the Government should not succumb to the temptation to raise the upper national insurance threshold above the starting point for upper rate income tax. There was considerable debate in another place about how that might be achieved, the problem being—as Members in another place sought to address when they tabled amendments—the completely different process and procedures for dealing with income tax and national insurance changes and the different timetable for introducing a national insurance change that starts at the beginning of the tax year and a tax change that starts at the beginning of the tax year.
	No doubt we will explore some of these issues in Committee, but it seems to me that one could go some way towards dealing with this problem if the Government effected two things. First, they could confirm that for the remainder of this Parliament, at least, the upper national insurance limit would not exceed the threshold for the 40 per cent of income tax and that from now on changes to both those limits could be set out in the Pre-Budget Report. If they moved in step—which seems to be what the Government want and what there is a consensus on—people would be reassured; but if there was any attempt to hide the limit for national insurance purposes beyond the threshold for higher rate income tax, we would at least be forewarned before statutory instruments were introduced and there would be that much more scope for parliamentary debate.
	We could, of course, begin to treat national insurance in legislative terms as if it were a tax, but that is probably too revolutionary a step and certainly way beyond the scope of this Bill.

Baroness Noakes: My Lords, when we debated the Queen's Speech last November, I said that we would greet this Bill with little enthusiasm. The intervening five months or so have done nothing to change that.
	The noble Baroness, Lady Hollis, has used this opportunity to return to the fray on buy-back. The whole House was shocked when the Minister reneged on the commitment that he had given her during proceedings on the Pensions Bill. The noble Baroness, in her doughty way, has refined her attack and sought to deal with the objections that the Government have come up with. In particular, through the use of hurdles, she wishes to constrain the annual cost of implementing any buy-back proposals. I just say to the Minister today that the noble Baroness makes a strong case and, if she decides to pursue it in this Bill, without making any commitments, we will look very carefully at whether we can support her on the refined basis that she has put forward.
	For all the Minister's fine words, this is a money-grabbing Bill designed to pour a couple of billion pounds each year into the Treasury. It has a fig leaf of pensions and national insurance reform but money is what it is about. It is ironic that your Lordships' House is able to consider this Bill in detail because, technically, it is not a money Bill. The noble Lord, Lord Newby, referred to this. I welcome the opportunity to consider this Bill fully and would welcome the ability of your Lordships' House to consider the technical aspects of Finance Bills in future. But that is for another day.
	As the noble Lord, Lord Newby, pointed out, it is little more than a fiction that national insurance is not a tax. The money goes into a mythical National Insurance Fund. But, as the noble Baroness, Lady Hollis, pointed out, there is a surplus building up in that fund. On the basis of the last accounts that I could trace, the Government Actuary recommended a balance of around £10 billion at March 2006, but at that date the fund had £34 billion in it—and so £24 billion had already been used to prop up the Government's spending. Will the Minister say when the 2006-07 accounts will be available, as they seem to be overdue? What does he expect the figure to be on an up-to-date basis—say, at March 2008—and what impact will this Bill have on the surplus? The noble Baroness, Lady Hollis, referred to the increasing surplus that we expect to see from higher rates of higher national insurance payments being made. It is clear that the money which will be raised by this Bill is in substance an increased tax, because it is not needed for National Insurance Fund purposes. Rather, it will fund the UK's budget deficit, which I remind the House is now outdone in relative size only by those of Pakistan, Hungary and Egypt.
	The first thing that this Bill does is to increase the upper earnings limit so that employees pay national insurance at the full rate on more of their earnings. This was introduced by the Prime Minister when he was Chancellor as part of the package of income tax changes which have been so mishandled by the Government. Only those on middle incomes are affected by the raising of the upper earnings limit under this Bill, paying £ 1.5 billion a year as their contribution to the package. But we know, as the noble Lord, Lord Newby, pointed out, that another part of the package was the 10p rate abolition, which hit 5.3 million mainly single people on low earnings. We still have no details on how, when and to what extent that wrong will be righted. I am sure that voters, when they go to the polls tomorrow, will remember that the Prime Minister knows how to raise money but has no idea about how to do it with fairness and equity.
	We agree that, in principle, the national insurance and income tax systems should be harmonised, but this Bill does not do that. There are still significant differences between the two, including the weekly basis of contributions and different bases on which national insurance and income tax are levied. Noble Lords should be aware that this Bill is not about reform; it is about grabbing £1.5 billion a year dressed up as reform.
	The Government pretend that this Bill harmonises the upper earnings limit and the start point for the higher rate tax, but that is completely untrue. What the Bill does is to give the Government power to raise the upper earnings limit by order to whatever level the Government choose. There is no restriction on the amount at which the upper earnings limit can be set. The noble Lord, Lord Newby, referred to the loss of the constraint of the 6.5 to 7.5 times the primary threshold, contained in current legislation. The only constraint is the rather ludicrous one of there being an affirmative order. I agree with the noble Lord, Lord Newby, that that allows for insufficient scrutiny and we shall return to this area in Committee because we believe that some restrictions on the Government's use of this power should be enshrined in legislation. I can tell the noble Lord, Lord Newby, that I have given some thought to a series of amendments that might achieve the alignment over the next two years but also put a constraint on the Government thereafter.
	The second thing that the Bill does is to raise money for the Treasury by stopping the accrual of S2P above an upper accruals point from 2009-10. As I have already made plain to the House before, I have never understood how S2P actually works, but I am hoping next year when I reach pensionable age that I might find out whether I have accrued any. This change raises approximately £450 million a year, mainly through contracted-out rebates. We heard the Minister's spin on this; it is all about implementing the Pensions Commission recommendations that the S2P should be flat-rated by 2030. The Government's May 2006 White Paper, Security in Retirement: Towards a New Pension System, was very clear on the Government's policy. It said at paragraph 3.13 that,
	"we will ... reform the State Second Pension so that it becomes a simple, flat-rate weekly top-up to the basic State Pension. Accruals will start gradually to become flat rate at the same time as we start to uprate the basic State Pension by earnings. We estimate that the State Second Pension will become completely flat rate around 2030 or shortly afterwards".
	The policy was to link flat-rating to earnings linking and the 2030 date for the completion of the flat-rating was a mere estimate.
	All we know about earnings linking is that it will not start before 2012 but could start any time thereafter within the next Parliament, subject to the Treasury's view of "affordability". We also know that the Government's finances are not in great shape and so there are considerable doubts about whether the commencement of earnings linking can be afforded in 2012 or even in 2015. We shall be exploring this further with the Minister. For today the key issue is that flat-rating the S2P is being started three years ahead of its earliest planned date and possibly six years ahead of the actual introduction of earnings linking. The Minister has rehearsed the Government's line that they had to act because the increase in the upper earnings limit in Budget 2007 meant that, if nothing else were done, flat-rating would be delayed from the date of 2030. But the 2030 date was merely an estimate rather than a target and hence there is a degree of hypocrisy in now elevating it to target status.
	In another place my honourable friend Mr David Gauke probed Treasury Ministers on this decision to bring forward the start of flat-rating. The answers that he received are somewhat incredible. Apparently the Treasury knew when Budget 2007 was put together that the UEL changes would increase the S2P accruals and would hence affect contracted-out rebates in the near term, and that this additional cost was included in the 2007 Red Book. I think the noble Lord, Lord Newby, was looking for revenue in the 2007 Red Book. Actually it was an additional cost that we are told is in the Red Book but I have not found it either. The Treasury also knew, apparently, that it would affect the flat-rating projections but it seems that the Chancellor, the other Treasury Ministers and Treasury officials thought it quite unnecessary to tell anybody about it at the time. Instead they waited until this Bill was considered in another place before coming clean on the issue. At best, this is Government at their least transparent.
	Having increased the UEL, there were several options for achieving flat-rating. Given the Government's existing policy statements, a disinterested observer might conclude that the most rational way was to realign from 2012 or from whenever earnings linking was introduced if that were later. Whether to flat-rate by 2030 would have been a separate decision affecting the speed of achieving flat-rating. Any observer who knows this Government would know that the Treasury would just see another stealth tax on offer and select the option which produced the greatest inflow to the Treasury. We have stopped counting the number of stealth taxes the Prime Minister introduced when he was Chancellor because the number grew so large, but this one has to qualify for a special prize for stealthiness.
	We should also remember that the Government have form on using national insurance rebates. The last quinquennial determination blatantly loaded costs onto employers in order to save the Treasury money. The Government ignored the advice of their own Government Actuary as well as submissions made by employers and the pensions industry. The Government lamely tried to hide behind the words "cost neutrality" and "fiscal circumstances"—that is, the Treasury's view of what it wanted to afford rather than what occupational pension schemes needed in order to compensate them for assuming contracted-out obligations.
	In this Bill the Government are at it again, giving plausibility to their raid by describing the rebates in the impact assessment as "anomalous gains" for employers. When are the Government going to treat private sector occupational pension schemes, especially defined benefit ones which are most affected by the rebates, with respect? Do they really think that employers, already cheated out of their contracted-out rebate levels, think that these so-called gains are anomalous? The Government are doing everything possible to kill occupational pension provision and we will be discussing that again with the Minister when we reach the Pensions Bill. This is a miserable little Bill. I feel sorry for the Minister, who is an honest man, for having to come to the House to defend it.

Lord McKenzie of Luton: My Lords, it has been an interesting debate. I am flattered by the noble Baroness's concern but I am happy to bring this measure before the House and I am very grateful to the small band of noble Lords who have gathered tonight to comment on it.
	Before I respond to each of the points raised, let me remind the House of the two purposes of the Bill. First, it allows the Government to deliver the package of personal tax reforms announced at Budget 2007, in particular by allowing the upper earnings limit to be aligned with the point at which higher rate tax starts to be paid. This Bill makes possible a major simplification of the UK's tax and NIC system. I believe that has a measure of support from the noble Baroness, Lady Noakes, although I acknowledge that there is not an identity between the tax and NIC systems. We are not suggesting that there is. Secondly, the Bill is looking at providing a solid and simpler state pension. I will come back to the issues as to why we have advanced the introduction of the upper accrual point in a moment.
	I will move on to the individual points raised and start with my noble friend Baroness Hollis. She asked specifically about the lower earnings limit and its link to the basic state pension and expressed a concern that when pensions are increased by earnings, this could drag up the lower earnings limit and therefore exclude people from benefit. It is typical that my noble friend focuses on the lower paid when others have looked at the other end of the scale. This problem was identified and the Pensions Act 2007 makes amendments to break the link between the LEL and the basic state pension from when the basic state pension becomes earnings linked. Breaking that link will avoid the issue that my noble friend has focused on.
	The noble Baroness, Lady Noakes, and my noble friend referred to the issue of class 3 buy-back contributions. I reject the assertion that the Government have reneged on their commitment. What was set out at the time in the other place by my honourable friend Mike O'Brien and repeated by me here was that we would look to try and make the proposition work but having regard to fairness, affordability and simplicity. A lot of work has been done since our debates with HMT and HMRC and stakeholders have had some informal meetings to try and make the proposition work. Our priority and the priority of my noble friend, as expressed tonight, was to find an option which would particularly target women on low incomes living in this country. The challenge has been to come up with a proposition that fits that description. Poorer pensioners are likely to be better off if they are close to retirement under pension credit and it would therefore not benefit them to pay voluntary contributions. They may find themselves paying voluntary contributions and getting no benefit because there would be a withdrawal of pension credit pound for pound. The cost of six years of class 3 contributions is currently around £2,500 and around three quarters of households in the bottom three income deciles containing women aged 55 to 59 have less than £5,000 in savings.

Baroness Hollis of Heigham: My Lords, the whole point of being able to buy at the point of your retirement is that the increase in your pension more than pays for the cost, even if you had to borrow that money by loan.

Lord McKenzie of Luton: My Lords, that depends on how long one is going to live. It is generally the case that people at or close to retirement do not wish to take on extra borrowing. Even if there is an arithmetic case for what my noble friend says—I accept that point—I doubt whether, as a practical matter, poorer households would want to take on that additional borrowing.
	One concern is that those who could take advantage of the proposal are wealthy expatriates—men and women. We estimate on the original proposition that something like 65,000 people living overseas could benefit. I acknowledge, as indeed has the noble Baroness, Lady Noakes, that my noble friend's subsequent amendment to the proposition, particularly to have a 20-year contribution threshold, certainly helps to reduce the cost and raise the barrier to exclude some of the non-residents, but there are potentially significant costs attached.
	My message is that we need to continue talking about this issue. I want to emphasise my noble friend's point about the changes made in the Pensions Act 2007. They will narrow the gender pensions gap and deliver fair outcomes to women and carers, and significantly improve women's state pension coverage. I will not go through the detail because we have discussed it before and the clock is moving on. The concern is about targeting. If we had a way of reaching those poorer women whom my honourable friend is most concerned about, as are we, there may be scope for moving forward on that matter.
	My noble friend also asked about the National Insurance Fund and what would happen to the surplus. My noble friend is well aware that that surplus is invested back into the public sector. If it were not available, the Government, through borrowing or raising taxes, would have to find the wherewithal by other means to fund their current Budget.

Baroness Noakes: My Lords, does the Minister therefore accept that it is fulfilling the function of a tax?

Lord McKenzie of Luton: My Lords, we can debate the differences between income tax and NICs. For example, income tax is focused on all incomes and national insurance just on earnings. On income tax there is no age limit but for NICs there is a 16 to 60 or 65 age limit. Income tax works on a cumulative basis but NICs is based on an earnings period. The two are not the same.

Baroness Noakes: My Lords, perhaps I can explain. I understand that they are on different bases. I was seeking to make the point that there is an accumulating surplus in the National Insurance Fund not needed for current purposes and not needed according to the Government Actuary's Department calculations. It is going into the National Insurance Fund and is being siphoned off immediately into funding expenditure for which it was not designed in the same way that tax is used to fund expenditure. That was the point that I was making, not the technical underlying bases of how they are raised.

Lord McKenzie of Luton: My Lords, nobody is trying to hide what happens to the resources that go into the National Insurance Fund. There is a surplus, but that is used to support other government expenditure.
	I would particularly like to deal with the suggestion that this is all about raising revenue. I made it very clear in my opening remarks that this was part of a package. If you look at the components of that package, from removing the 10p rate there was a benefit of £8.6 billion. Reducing the basic rate to 20p cost £9.6 billion. The alignment of NICs created a surplus of £1.5 billion. Raising the aligned UEL and HRT by £800 a year—the inflationary increase—cost £0.25 billion. An increase in age-related tax allowances by £1,180 above inflation cost just short of £1 billion. There was a price tag of £1 billion for an increase in the child element of child tax credit by £150 above earnings and there were other components. Overall, that package cost £2.5 billion—before whatever might arise from the current look at two groups of people who have been debated extensively recently. It is simply not right to peel away one component and say that this is about raising revenue. It is not.

Baroness Noakes: My Lords, may I clarify something? Is the Minister saying that this national insurance hike is just being used to fund tax effects elsewhere in the system? If so, in what sense is it national insurance and not a tax?

Lord McKenzie of Luton: No, my Lords, I am not saying that. I am saying that the starting point in all this is to simplify the tax and national insurance system. The noble Baroness's party called for that and I thought in principle supported it. She referred to that earlier. Other commentators have supported it. The IFS has supported that alignment as a simplification of the system. If you are going to simplify the system, that is done by having various components at its point of introduction. It is absolutely right to do that. But it is entirely spurious to take out one component and say, "This is a tax increase. That is what this is all about". That is absolutely not so. The noble Baroness, Lady Noakes, knows that full well because she can read the numbers as well as I can.

Lord Newby: My Lords, I do not necessarily want to support the noble Baroness, because she is perfectly capable of making her own argument. However, if the Government raise taxes, by and large, they spend it on something. That does not mean that they have not raised taxes in the first place. That is what is happening here. It may be that the money is being spent on the most wonderful purposes that humankind has ever considered, but that does not negate the fact that in order to spend it you have to raise it. That equates to a tax.

Lord McKenzie of Luton: My Lords, of course this particular item raises revenue, but it is part of a package, where there are costs from changing other aspects of the system. Surely, it is right to look at this in aggregate. You cannot seriously argue that you can pick one component and say that this is all about raising taxes. It is simply not the case.
	The noble Lord, Lord Newby, asked specifically about projections and what changes would happen as a result of allocations of revenue collected between the UAP and the UEL—a point raised by the ICAEW. The introduction of UAP does not affect the overall application of NICs between the NIF and the NHS, which are calculated in accordance with Section 162 of the Social Security Administration Act 1992. It does not affect that at all.
	The noble Baroness, Lady Noakes, asked about the latest accounts. I shall have to write specifically on the 2006-07 accounts, but I am advised that there is a Government Actuary's Department report published in January 2008. I am not quite clear what period that covers, but I will write to the noble Baroness with more details.

Baroness Hollis of Heigham: My Lords, the latest stats that I could get were dated January 2007. I tried, exactly as the noble Baroness did, to find out whether there was a set of January 2008 stats. We are actually dealing with 2005-06 real figures and forecasts for the years thereafter. I am afraid that she is absolutely right: we seem to be running behind. Perhaps there is a good reason for that, but she is absolutely right.

Lord McKenzie of Luton: My Lords, I will certainly make sure that all noble Lords who have contributed tonight will get a response on that. I do not have the details immediately before me.
	The noble Lord, Lord Newby, and the noble Baroness, Lady Noakes, asked why we should allow changes to national insurance to take place by affirmative order and whether that gave the Government carte blanche to do things that they should not. We have been clear about aligning the UEL at the higher rate tax starting point just as we have been clear about aligning the primary threshold with the personal allowance—effectively the start of income tax. That latter point is dealt with by regulation. I can see no reason why the level at which employees stop paying NICs at the main national insurance employee rate of 11 per cent should be subject to primary legislative restrictions, when the point at which they start paying NICs has none. There is simply a symmetry about that.

Baroness Noakes: My Lords, does the Minister think that there ought to be statutory requirements in relation to both ends?

Lord McKenzie of Luton: My Lords, the arrangements in respect of the primary threshold have worked perfectly well since it was introduced and we have stuck by the commitment to maintain that alignment. That is what has happened in practice so I do not see why it should not operate at the other end as well.
	The noble Baroness said that we should not have gone about the flat rating as we did. To reiterate the point: the need to bring forward the timing of the upper accrual point was driven by the change in the upper earnings limit. If that were not increased, there would have been no necessity. I believe that the noble Baroness is trying to make a point.

Baroness Noakes: My Lords, the point I wanted to make—which I should not have done from a sedentary position, for which I apologise to the House—is that that is the Government's spin on the position.

Lord McKenzie of Luton: My Lords, I reject that. The various components of the settlement were very clear in the provisions that we debated last year, including when there could be an earnings-related uprating of the basic state pension. It was a carefully constructed package that had financial implications which had to be affordable. If one component changes, it seems entirely reasonable that we should try to end up where we would otherwise have been, where that settlement was going to take us, and that is what this is doing. Notwithstanding that, there is still some extra gain for higher earners beyond that which would have accrued to them under the original proposals, because by bringing forward the upper accruals point a few years early, there is still a longer time period by which that level of earnings would be within the S2P accruals. So it is entirely justified to do what we are doing in the Bill.
	I hope that I have covered most of the points that noble Lords have raised; if not, I would be very happy to receive more interventions. I reiterate that this is a narrow technical Bill which is based on wider issues that are current at the moment. We will cover more of the detail in Committee. Trying to simplify the income tax and national insurance system, which is what this facilitates, and trying to make sure that our pension settlement consensus stays on track, where it should be, is the right thing to do. For that reason, I commend the Bill to the House.
	On Question, Bill read a second time, and committed to a Grand Committee.

Constitutional Renewal Bill: Joint Committee

A message was brought from the Commons that they concur with the Lords that it is expedient that a Joint Committee of Lords and Commons be appointed to consider and report on any draft Constitutional Renewal Bill presented to both Houses;
	That a Select Committee of 11 Members be appointed to join with the committee appointed by the Lords to consider the draft Constitutional Renewal Bill;
	That the committee should report on the draft Bill by 18 July 2008;
	That the committee shall have power—
	to send for persons, papers and records;
	to sit notwithstanding any adjournment of the House;
	to report from time to time
	to appoint specialist advisers; and
	to adjourn from place to place within the United Kingdom.
	House adjourned at 8.02 pm.